Lord Fowler: My Lords, we are grateful for the advisory points that the Minister has made.
	The most recent Friday debate that I took part in as a Back Bencher was in the other place, where three or four of us, including the much-missed Lord Carlisle, turned up to debate official secrets. So perhaps I may say first that it is good to see so many noble Lords here and so many speakers on the list. It bears some witness to the importance of this House and to the importance of the BBC and the media industry.
	The Select Committee was established just before the Government published their Green Paper on the future of the BBC and much, but not all, of our inquiry was focused on the Government's proposals in that Green Paper. Throughout our inquiry we met twice a week to take evidence. We conducted visits to Bristol, Wales and Germany. We were particularly well-received in Germany, although that may have had something to do with the fact that the Germans had received the impression that the noble Baroness, Lady Bonham-Carter, was the star of the countless movies made by her cousin Helena Bonham-Carter. We were just very happy to travel on the Bonham-Carter family coat tails.
	I am grateful to all members of the committee for their hard work on this report. Perhaps I may single out the noble Baroness, Lady Howe of Idlicote, whose persistence resulted in the committee being established. I am grateful for the quite exceptional support we received from our official team—Chloe Mawson, Peter Hill-Jones and our adviser Richard Collins—and last but not least I am grateful to all the witnesses who gave evidence to us. We had working journalists such as John Humphrys, Nick Robinson and Adam Boulton as well as the chairmen and chief executives of not only the BBC but, for example, ITV, Channels 4 and 5, and BSkyB.
	I do not claim they all agreed with our proposals, although there was substantial agreement on one point: the value and high reputation of the BBC. That is perhaps the starting point. The BBC is the cornerstone of broadcasting in the United Kingdom. The committee approached its task from a position of admiring the standards of the BBC and wishing to preserve them. Perhaps I may put this gently: that has not always been the starting point of parliamentary committees like ours.
	We think it is fundamentally important that the BBC's standards of fair, balanced reporting should be maintained and, although obviously there are errors, we note that the public rating for the reliability of the BBC is very high. That applies to television, radio and, I should add, the BBC World Service. I remember as a reporter myself in the Middle East war in 1967 being in Beirut and watching American reporters desperately trying to tune into the World Service to try to find out what was actually happening. Some 35 years later, my stepson covered the Iraq war and found the same situation—reporters relied on the World Service for accurate news of what was happening. Much has changed in the past 35 years, but the World Service's reputation remains very high. There is one other reason why the BBC is important. Thanks to the Communications Act 2003, ITV could be taken into foreign ownership, perhaps American, and its programme character changed. The BBC and Channel 4 are the only broadcasters who must remain under national ownership, with all that means for the production industry.
	The title of the Government's Green Paper was A strong BBC, independent of government, and in choosing that title the Government proposed the criterion by which their proposals should be judged. In practice, our view was that the Government's proposals do not reduce the BBC's vulnerability to political pressure and, in particular, the pressure of government.
	When I talk of "government", I mean governments of both parties. I served with two Conservative Prime Ministers—my noble friend Lady Thatcher and John Major. Neither was what I would call an outright supporter of the BBC. At a dinner of the Cabinet to mark her 10 years in power, I remember my noble friend Lady Thatcher remarking, "If I was ever tempted to say anything nice about the BBC, Denis soon persuaded me out of it"—not that she was tempted very often. I say in parenthesis that we are all delighted that she is now out of hospital.

Lord Fowler: My Lords, in the 1992 election campaign after a particularly fierce altercation with the BBC, I also remember John Major rounding on me and saying, "You won't be able to hold me back for ever on this"—a remark that I did not take as a declaration of undying devotion to the corporation.
	On the other side, we had Harold Wilson saying that if the BBC did not mend its ways, the government would see that it did. Coming very much up to date in the events surrounding the inquiry of the noble and learned Lord, Lord Hutton, the former chairman of the BBC, Gavyn Davies, said in evidence to us that he believed the newspaper reports to be correct when they were saying that,
	"the Government would change the governance of the BBC . . . and change the funding of the BBC"
	as a result of the BBC's actions. I do not want to argue about whether he was right or wrong; I simply assert that the chairman of the BBC believed that to be the case.
	Frankly, we can take it that all governments want to influence the BBC, which is not greatly different from wanting to influence the press. But there is perhaps one difference. Governments do not own the press, and you might say that they do not own the BBC either. But they do control the levers of power over the BBC. Governments determine the terms of the Royal Charter and, even more importantly, the more detailed agreement between the Secretary of State and the BBC. Government appoint those who are responsible for the running of the BBC, and government set the level of the licence fee without any outside, open and independent verification. Taken together, that amounts not so much to influence but to the potential for real power, and that power comes from the fact that the BBC is established by Royal Charter.
	I am not sure that every parliamentarian, let alone the public, knows what that means in practice. After a Green Paper and a White Paper, we expect a Bill, which will be scrutinised by both Houses of Parliament before becoming an Act. That is simply not the case with the BBC. The Government decide. Provided that the BBC and the Government—in practice, the Secretary of State and the chairman—agree, it is a done deal.
	The Secretary of State was quite frank when she gave evidence to us. She defended the charter process on the basis that it had always been done that way and said that her paper was a mixture of proposals for discussion and decisions that had already been taken—a mixture of Green Paper and White Paper. To use her description, it was a pistachio ripple—a particularly nasty ice cream which is neither one thing nor another. That sums up one of our main areas of disagreement—the proposals on the governance of the BBC. Those show not only our disagreement on the detail but also the inability of anyone to do anything about it.
	Again, in précis, the Government want a BBC trust with a non-executive chairman to take over from the governors and then a management board beneath that, which also, oddly, will have non-executives sitting on it and could be chaired by another non-executive chairman. There are few, if any, examples of non-executives sitting on management boards in outside industry. Indeed, it is difficult to see how non-executives would have the time or availability to sit on an executive board, which, almost by definition, meets more frequently than the main board. But that is the proposal. That is what the Government want to do. What the Government do not want is any increased outside regulation of BBC activities.
	Our proposals, on the other hand, are for a BBC board headed by the chairman of the BBC; a management committee headed by the director-general but without non-executives; and an increased role for Ofcom in the area of content regulation and competition. I could argue this at length; suffice it to say that our reservations on the Government's proposals are echoed by a whole range of outside bodies, committees and individuals. Sadly, this is not a matter for discussion. The proposals on governance have been criticised but they are the white part of the pistachio ripple. The decision is taken.
	It is for reasons such as this that we propose an important change regarding the BBC. The committee felt strongly that the process for agreeing the BBC's constitution should be open, transparent and not in the hands of one political party. For that reason, we recommended that the BBC's mandate and structure should be defined in statute and not by Royal Charter. The passage of any Act through Parliament is more democratic, more independent and more transparent. It provides for all-party involvement and protects the BBC from the pressures exerted by one political party. The House of Commons is the only forum that can claim to represent all licence fee payers. Certainly we do not want continual interference and change, but we do want increased accountability to the licence fee payer. We should remember that the Culture, Media and Sport Select Committee of the House of Commons came to exactly the same conclusion. So the committees of both Houses are saying the same thing here.
	Accountability to the licence fee payer is fundamental. For let us remember that we are dealing with a corporation with an annual income of £3 billion provided by the public—and provided predominantly through the licence fee. That is a vast sum and, as a result, we looked at the basis of the licence fee. We recognise that it is a regressive charge but we came to the conclusion—here we agree with the Government—that the licence fee is the best, or certainly the least worst, way of funding the BBC. To do so through general taxation would place even more power in the hands of government. Changing to advertising would obviously change the whole character of the BBC and that is not supported in the public surveys.
	But the licence fee system also imposes conditions on the BBC. We believe that the process whereby the fee is decided should be as open as possible and we certainly believe that the BBC should achieve the very maximum of value for the money received. The public already pay £126.50 a year. The BBC has now proposed to the Government that this should be increased by RPI plus 2.3 per cent, or even RPI plus 2.8 per cent. Even on the basis of RPI plus 2.3 per cent, that would mean a licence fee in 2013 of £150.50 in—I emphasise—today's prices. Making allowance for the estimated increase in the RPI, the figure would be £181.50.
	We should be frank. That scale of increase is too high and should be reduced. We see no reason why increases should automatically be on the basis of RPI plus. We see two areas where reductions in costs can be achieved. The first is in the hands of the Government. The Government are proposing that the costs of digital switchover, over the next few years, should be borne by the licence fee payer. They are also making the BBC responsible for giving special help to those who may be unable to afford the personal cost of digital switchover. We do not deny that there will be costs from the switchover, but believe that these costs should be borne by the general taxpayer. The case for helping the vulnerable should come from the budget of the Department for Work and Pensions. In a sense, that case in unanswerable.
	The Government will also be gaining receipts from the sale of the analogue spectrum. We may be going from analogue to digital, but that does not mean that analogue will be worthless. The frequencies are a potentially valuable asset, which can be used for mobile and cordless phones, for example. Estimates of value vary, but most are in the range of between £1 billion and £2 billion. As it stands, the Treasury take the receipts and licence fee payer bears the costs.
	The BBC itself needs to make stronger efforts to contain costs, however. A prime example is the proposed move of the sports and children's programmes to Manchester. We support that move. It is an imaginative thing to do. Frankly, however, we find it incredible that the move will cost an extra £50 million a year, with a payback in 25 years. The BBC does itself no favours in putting forward figures of that kind. Work is now taking place to review and reduce them, but it points to a major defect as far as the licence fee payer is concerned. There is no outside, independent, open check of the figures being put forward. The National Audit Office, which already does such valuable work—not least in relation to the World Service—should have its role expanded, so that it can do the value-for-money audits it chooses to, and check on the components on the BBC's bid for licence free increases. It should look at the costs, and at any increase in income that might come from an increase in the total number of licence fee payers.
	In passing, I hope that, at long last, the Government might make some decision on decriminalising the non-payment of the licence fee, an issue which has now dragged on for year after year.
	The BBC is protective of its autonomy, and I understand why that should be the case. Equally, however, it has to take into account how public expectations have changed. As in other areas of life, the public expect, for example, their complaints to be dealt with fairly, and for it to be demonstrated that they have been dealt with fairly. In this regard, the present position is utterly confused. If a member of the public is offended by a programme—or even the prospect of a programme—he or she can complain to either Ofcom or the BBC. Thus there were many complaints about "Jerry Springer the Opera"—so many that I even switched it on myself to look. Frankly, it was a very tedious piece of television, but please do not write to me on that point.
	In contrast, complaints on accuracy and impartiality are dealt with by the BBC alone. We propose that complaints should first go to the BBC, but those who are dissatisfied can appeal to Ofcom, just as Ofcom operates now for commercial broadcasters. I do not regard that as unnecessary interference in the affairs of the BBC, but simply as ensuring an independent check for the public who finance the corporation.
	As I said at the beginning, the committee came to this inquiry as admirers of the BBC. I can well believe that, having listened to what I have said, one reaction inside the corporation might be "If these are our friends, save us from our enemies". That, I think, would be a mistake. This committee wants to see a strong BBC, independent of government. But we also want to see a BBC which is accountable to, and serves, the public who finance it. Our report is about getting that balance right.
	I have sought to summarise some, but only some, of our proposals. Even given the very hard work that the committee put in—it has worked extremely hard—there were areas that we were unable to cover before we had to publish our report. I was grateful, therefore, to the House for agreeing to extend our timetable—indeed, the life of our Select Committee—until spring next year. That will enable us to publish a second report on issues such as the BBC's proposed move to Manchester, the World Service and broadcasting of sport and religion, each one an important subject in itself.
	Finally, the media—broadcasting, press and the new media—are vastly important. The standards and ownership of the media potentially affect all our lives. It is right that owners, broadcasters and journalists should be put under scrutiny in the same way that the best of the media put politics, business and the rest under scrutiny.
	This House is particularly well qualified to carry out that task. It has the experience. There are men and women here who are uniquely qualified and, inevitably, there is rather more experience here than in the other place. This House also has independence. We are not seeking the support of a particular media organisation for our cause. We do not woo the press, the BBC, or anybody else. In the main, I think, we are not seeking quick headlines. That independence could be put to good use in the public interest. There is a strong case for having a permanent Select Committee of this House examining media affairs. There is an opportunity for us to take a step forward here. I hope that opportunity will not be missed.
	That, of course, is a matter not for the Government but for this House to decide. I simply hope that the work of our Select Committee is of sufficient standard to show what can be done and that it will add to the case for the kind of permanent committee that I am advocating. I beg to move.
	Moved, That this House takes note of the First Report of the Select Committee on the Review of the BBC's Royal Charter (First Report, HL Paper 50).—(Lord Fowler.)

Lord Judd: My Lords, I am sure that the whole House is deeply grateful to the noble Lord, Lord Fowler, and his colleagues for the excellent work of the Select Committee. I am also grateful to the noble Lord for the way in which he has introduced his report today.
	When speaking about the BBC, I find it difficult to avoid superlatives. It is a priceless national asset. It is part of the profile of the United Kingdom at its best. At its best, it represents the kind of civilised Britain in which we all want to live. If we say that, it is perhaps not remiss at this juncture to pay warm tribute to all the personnel and staff who, over a long and distinguished history, have achieved this reputation.
	The BBC must obviously be jealous of its standards and record. That is why there was inevitably anxiety as to how it would come through the "Hutton wobble", and whether its resolute independence and quality would remain unscathed. Understandably, there were indications of some loss of nerve. It seems that on the whole, however, everything is back on track.
	The quality of available information, of analysis and constructively critical intellectual—in its widest sense—stimulation, is central to the sustainability and effectiveness of open democracy. Indeed, it is the lifeblood of democracy. In the increasingly complex context of globalisation, with the tendency to remoteness of so much decision-making and the consequent danger of a growing sense of disempowerment, this becomes more important than ever. The BBC has established a key standard-setting leadership role in responding to this challenge. It is a role that must never be undermined or jeopardised by internal institutional politics, by unsuitable governance and management structures, or by external pressures.
	The same arguments apply to the role of the BBC in the struggle to sustain and enhance the quality of our national cultural life and, indeed, the fundamental values which make our society one in which it is good to live. The story of the media as a whole in this respect has always been complicated. On the one hand, there are the commercial realities; on the other, there is the historic duty to sustain democracy. I am sure that I am not alone in reflecting that too much of the media have been drifting down the road towards becoming just another commercial commodity. Too much of the media have become part of the prevailing mores—if that is not to demean the word—of knowing the immediate price of everything but the value and long-term costs of all too little.
	Of course the Select Committee is right to call for a wide range of programmes. Exclusivity would compound, not meet, the dangers to which I have referred and outreach and accessibility therefore matter. Programmes should be lively and fun and not unnecessarily dull. But an underlying concern in the Reith tradition of engaging listeners in citizenship should be constant. The BBC must never be part of the cynical trend towards confusing consumerism with citizenship. It must avoid a neurotic pre-occupation with ratings, which could too easily drag it into the downward spiral of popularism and dumbing-down. Its public service commitment should, I believe—and here I have a slightly different emphasis from the Select Committee— remain the jewel in a sparkling crown.
	I have referred to globalisation. Recent educational work by the BBC in linking schools and communities here with those in Africa and the wider world has been an outstanding example of an imaginative approach. Perhaps at this point I might add that, for me, quality in life includes the style of our human activity and of our personal relations and interaction. We are all distressed by yobbery in our national life. Courtesy and sensitivity can, in my view, enhance, not detract, from the quality of critical probing and analysis. The BBC has an immense contribution to make in this respect.
	Reference has been made to the World Service. It is interesting to note those among my friends who listen to the World Service in the United Kingdom because of the quality of what they find there. That is an important tribute to the World Service. It is a challenge to the domestic programmes. Perhaps like others in the House, when I speak of the World Service I have a sense of nostalgia. I grew up in an internationally minded family and a vivid picture of the service stays with me. I remember as a young boy during the war sitting with my father late at night—it was almost a treat—listening to all the national anthems being played one after the other as broadcasting closed down. What the BBC then meant to the cause of freedom and to the survival of values that we all treasure cannot be over-estimated. That is a tremendously important inheritance for the overseas service.
	In recognising that the BBC service has such an incredible contribution to make, we must also recognise that there are limits to the resources. But I do not believe that too many resources can be made available for the World Service. We must beware of robbing Peter to pay Paul. I understand that it is necessary to establish priorities, but I worry when I see programmes for parts of Europe, for example, closed down in order to finance an Arab service. It may be that the number of listeners in Europe is not so large, but the quality and significance to those listeners to the future of democracy in those societies is most important. The closing down of that service is a sad development. In other words, we would be foolish and highly irresponsible to stint resources for the World Service.
	The Select Committee underlined the importance of television in the World Service and I agree with it. However, if there is to be an increased emphasis on television in its role, it must be of the same quality as that established in radio. That means adequate resourses, rather than just a race to ensure that everyone is being covered. I am not sure that the quality of its television role is of the same standard as that achieved in analysis and so forth in radio.
	I want briefly to mention local radio. It has an invaluable contribution to make in strengthening local communities. It has an important part to play in public service. In the part of Cumbria where I live, Radio Cumbria was indispensable during the severe flooding last winter. But I also believe that in this age of globalisation and impersonal decision-making, it has a special challenge to relate the international issues and decisions to the local community in ways that it can understand. Thereby, it will help to keep alive participation and faith in democracy.
	To guarantee all this, the BBC needs confidence in its robust and transparent independence. It needs the highest possible calibre of leadership at all levels. It needs generous resources—quality does not come cheaply. The licence fee is indispensable, but the Select Committee has raised important possibilities about future finances. It needs accountability for quality, coupled with convincing arrangements for effective accountability for the best possible and most cost-effective use of the available resources. Value for money must be transparent. Clear-cut management systems are also essential. Oversight and systems for accountability should not be confused with involvement and meddling in management. Towards all this, I find the Select Committee's recommendations extremely helpful and thought-provoking. I am confident that my friends in government will feel able to take them very seriously.

Lord McNally: My Lords, I welcome the committee's report. I associate myself with the tribute that the noble Lord, Lord Fowler, paid to the noble Baroness, Lady Howe of Idlicote. It was only the noble Baroness making a thorough nuisance of herself—at which she is very good—which persuaded a reluctant government and House authority to set up the committee. I supported its establishment and its continuance, and I supported the noble Lord, Lord Fowler, as its chairman. His outstanding speech in introducing today's debate, the robust independence of the committee under his chairmanship, and the quality of its work as evidenced by the report before us, make me feel fully vindicated. I also associate myself with his call for an oversight committee to become permanent.
	I do not agree with everything in the report, nor would I expect to. The work of such committees is not to bring final answers on tablets of stone, but to test proposals, stimulate debate and allow outside interests a platform for their ideas and evidence. The reports and evidence will fulfil all these functions.
	I start by reminding the House of the wise words of the noble Lord, Lord Sheldon, when he said that the BBC was one of the great gifts bequeathed by the 20th century to the 21st. The BBC has been one of the great forces for good in our democracy and our culture and in terms of our social cohesiveness. It has been a template for how we speak to each other and, as the noble Lord, Lord Judd, reminded us, how we speak to the world.
	My late predecessor as Leader of the Liberal Democrats in this House, Lord Jenkins of Hillhead, used, in another context, to talk of responsibility as "like carrying a very precious vase across a highly polished floor". I feel the same about the BBC Charter review process.
	In my final words to this House at the conclusion of the passage of the Communications Bill, I said that,
	"the next stage of this matter—the defence of the BBC and the BBC Charter—is a battle that has to be won".—[Official Report, 8/07/03; col. 259.]
	I still believe that we are in a battle for the future of the BBC. I do so because of the strange reluctance of this Government to take pride in the BBC as one of the resounding success stories of public enterprise; I do so because there are massive commercial interests, for whom a weakened and marginal BBC is a major objective; and I do so because there still seem to be politicians in both Labour and Conservative Parties who see Charter review as an opportunity to clip the BBC's wings and settle a few old scores.
	I have time to cover only two or three aspects of the report today. So, let me start with the licence fee. There will always be an element of the politics of the souk about the licence fee settlement, but I support the committee's central recommendation in paragraph 299 that,
	"the system of funding . . . until 2017 should be through a licence fee".
	I am not sure that there is a need for an interim review. If, as the committee recommends, such a review awaits the completion of analogue switch-off, we are then so close to 2017 that it would be far better simply to start work on a post-2017 settlement. We will be told that rapid changes in technology will demand earlier action, but it is the ferment and turbulence caused by technology change which requires a stable BBC as the iron pole around which our public service broadcasting can set standards of quality and integrity in our communications industries.
	On the other aspect of BBC funding—its commercial activity—the corporation finds itself in a classic Catch-22 situation. The noble Lord, Lord Smith of Finsbury, when Secretary of State, urged the BBC to maximise its revenue. When, in response, the BBC sharpened up its commercial act, there were immediate squeals of unfair competition. We on these Benches have long argued for greater transparency and separation of accountability in the BBC commercial operations. My noble friend Lord Sharman was instrumental in devising a formula which allowed the Public Accounts Committee some oversight of these matters. We support the committee's recommendation that,
	"the BBC fair trading commitment be reformed to ensure that it is clear and transparent and has the confidence of the wider industry".
	However, I repeat the Gypsies' warning that I have given in every debate since the paving Bill that established Ofcom: I believe that Ofcom's involvement in the BBC should be kept to a minimum. Ofcom is an economic regulator. It is a very good economic regulator. It is very eager to make the various markets under its control work effectively. What is not in Ofcom's DNA is an understanding that for over 80 years the British people, through their Parliament, have willed a distortion of the market.
	Mr Rupert Murdoch has said that public service broadcasting is "a definition of market failure". He is certainly right that public service broadcasting operates to different criteria than the market dictates—just look at the schedules of Sky One and BBC1 to see the proof of that. We are saying to commercial operators that we know ours is a distorted market, and you must come into our market knowing that that is the case. That is what we want because we believe that those distortions deliver public goods which the market is incapable of delivering.
	An economic regulator such as Ofcom is not programmed to defend the public interest by market distortion. That is precisely why Mr James Murdoch has argued recently that Ofcom should oversee the BBC. The BBC would then be subject to a "whine a week" from commercial competitors, who have the resources and the lawyers to entangle both Ofcom and the BBC in intimidating and stultifying competition complaints.
	At this point let me also make my usual disclaimer about Mr Rupert Murdoch. I have no hostility towards Mr Rupert Murdoch at all. Indeed, if I was a News International shareholder, I would be delighted at the robust way he defends my interest. What concerns me is whether Ministers defend the public interest with the same vigour as Mr Murdoch defends his shareholder interest.
	So, let us have a little test. I wonder if the Minister at the end of the debate could list the number of times the Prime Minister or the Chancellor have met Mr Murdoch or other senior executives of News International in the year coming to an end? Or, if he cannot tell us at the end of this debate, could he put a note in the Library? I have to tell the House that No. 10 have not been very forthcoming to my noble friend Lord Avebury when he asked a similar question. But, as the great John Junor used to say in the glory days of the Sunday Express,
	"I think that we should be told".
	I make one final point. The committee has already visited Manchester, and, as the noble Lord, Lord Fowler, said, that will be the subject of its next report. I believe that the BBC should stop using the move of certain departments to Manchester as a bargaining chip and make a full-hearted commitment regardless of the shape of the final settlement. The contribution that the ITV Granada already makes to the north-west's economy is significant. By an immediate and wholehearted commitment to the region, the BBC could be a catalyst for all the creative industries in the north of England, impacting on Leeds and Liverpool as well as Manchester; and such a wholehearted commitment will win the BBC far more friends than the game of poker it is playing at the moment.
	My noble friend Lady Bonham-Carter will deal with whether there is a better way of dealing with the BBC than by Royal Charter. I believe that she and the committee are probably right in saying that there is; and I look forward to her contribution.
	In the mean time, I welcome this report as a thorough and stimulating contribution to the charter debate. For more than 80 years the BBC has served this country well. Its system of governance may need some overhaul, but I think that the committee is right to warn against superficially glitzy solutions which have, within them, the seeds of future conflict. A robust system of governance is important, because I believe that history will increasingly see the Hutton report as a na-ve whitewash, which totally underestimated the need to protect the BBC from hostile political manipulation. That is why we will examine the much delayed White Paper, not only in terms of the Government's commitment to defend the BBC against vested commercial interests, but also in fulfilling its Green Paper commitment to "a strong BBC, independent of government".
	All political life is transitory. Even David Cameron will be future past one day. But in each political life there come one or two decisions which transcend any short-term politics. I would have been proud to have been part of that 1924-29 Parliament which saw the establishment of the BBC. We are now carrying the vase it created across a very shiny floor. It is our duty not to let it slip in the months ahead.

Baroness Howe of Idlicote: My Lords, I thank the noble Lord, Lord McNally, for his comments about my nuisance value and the noble Lord, Lord Fowler, for his kind comments about my rather more inspirational role in getting the committee set up. I particularly want to thank the noble Lord, Lord Fowler, for his excellent, knowledgeable and always good-humoured chairmanship. This was my initiation into Select Committee work in your Lordships' House. I am grateful for the experience, which has given me a wider insight into broadcasting media history, achievements and future prospects than I had enjoyed, even while chairing the Broadcasting Standards Commission.
	That experience has further convinced me of the crucial role of the BBC, not just in our own national economic, educational and cultural life, but in its important role internationally. In the UK, as noble Lords know, the BBC is admired and respected by the vast majority of citizens as the benchmark for quality public service broadcasting, while abroad its World Service, which people have called the jewel in the BBC's crown—I certainly agree—is renowned for its accuracy, editorial independence and expertise. We must not forget that all that reflects superbly on how Britain is perceived. But no one thinks the BBC is perfect. To anyone reading our report's criticism of aspects of current or past strategies, quite apart from what our chairman has already said, that is abundantly clear. Commercial broadcasters have some legitimate grounds for complaint and the BBC has acknowledged that a fundamental review of many areas of its activities is needed.
	However, in the midst of that unprecedented and still-accelerating period of change, it is vital that we do not between us all make demands on the BBC that will inhibit the corporation's ability to adapt and to continue to exploit for the public good those and other challenges that may occur. Let us not forget either that viewers and listeners are increasingly able to access the material they want via a wide range of devices, including computers and phones, and set their own viewing and listening into their own personal time frame. The effect of that on advertising and much more is still to be seen.
	Above all, during this next period of licence fee, the BBC must be allowed to retain enough intellectual and operational independence to develop the plans that it has already outlined for many more partnerships. Perhaps its most imaginative initiative is its plans for a WOCC—window of creative competition. I am sure that noble Lords will watch with considerable interest the rollout of how those valuable BBC archives are used. But at an equally important, practical level are plans for sharing programme-making premises—"creative production hubs", as ITV's Charles Allen has called them—with other broadcasters and independent programme-makers throughout the regions, thereby reducing overhead costs for all concerned.
	The BBC should be given credit for its many plans and arrangements—some already well under way—to add even greater public value to its public service broadcasting output, especially in its education and information services, but also in its entertainment services, which, our report stresses, must provide for the whole range of listeners' and viewers' tastes. An excellent recent example of that category is the widespread interest that the excellent programme "Strictly Come Dancing" has achieved.
	Returning to the BBC's educational services, we should never forget its supremely important partnership with the Open University, which has enriched so many citizens' lives. Building on that in wider partnerships will enable much more to be achieved.
	More problematic areas include the major and vexed question of how the BBC should be governed and regulated in future, which the noble Lord, Lord Fowler, so ably and amply addressed. It must be admitted that the various attempts to work out a more accountable system for the BBC than that proposed in the Green Paper—that includes our own—indicate a general unease with the DCMS/BBC model. Whether or not the Government are prepared to make any changes to their preferred model—surely some are necessary—in today's world, where trust in all organisations has declined, demands for greater public accountability and transparency in how public money is spent have multiplied, even for revered national institutions such as the BBC. I agree with all the comments made about money.
	I want to concentrate my remaining remarks on two issues. The first is how complaints from the public on programme content are dealt with. The BBC governors, in an attempt to give better value to licence fee payers, have already set up a more independent internal complaints procedure. That kind of approach is seen as the appropriate first step for dealing with complaints of programme content, whether from BBC or commercial broadcasters, within Ofcom's preferred "light touch" content regulation. However, for complaints to the BBC in areas that remain its sole responsibility, today's licence fee payers expect a far more transparently independent and external appeals process.
	It has been suggested that an additional regulator with responsibility for that and other purposes should be appointed. Equally, there is growing concern about the setting-up of ever more costly regulators. So, as noble Lords have seen, we have concluded that Ofcom, despite the fact that it is widely perceived as an economic regulator, should take on responsibility for adjudicating on the same range of appeals about BBC programmes as it does for other terrestrial broadcasters. But our report emphasises at paragraph 108 the crucial condition that that could be the solution only if Ofcom's current content board were significantly strengthened and made transparently more accountable to licence fee payers by becoming a semi-autonomous body along the lines of its consumer panel. As noble Lords know, the consumer panel operates at arm's length from Ofcom, has an independent budget and staff, makes independent reports, and has already made a significant contribution to Ofcom's work under the chairmanship of Colette Bowe.
	There is another reason why that condition is important. Those who took part in the passage of the Communications Act 2003 will recall that the content board was a last-minute add-on after vigorous concern was expressed on both sides of the House that the citizen, as opposed to the consumer interest, would not otherwise be adequately safeguarded. It is essential that that last-minute add-on should now be given the same transparent, independent status as Ofcom's consumer panel and be seen to take seriously the views and concerns of licence fee payers. I hope that the Government will accept the logic of that. It would also, incidentally, give considerably more added value to the citizen if they had access to more detail of how concerns about privacy and fairness, and the timing of programmes—the all-important watershed convention—are processed, or indeed whether enough quality public service broadcasting children's programmes are being made and transmitted, an issue that, in my day at the Broadcasting Standards Commission, required detailed monitoring.
	One experience while chairman of the Broadcasting Standards Commission stands out in my mind. At one gathering of the Royal Television Society's biannual Cambridge conference, I was one of a panel of broadcasters and other media people asked to comment on complaints from the public on taste and decency, and violence, that the Broadcasting Standards Commission had upheld. The audience or delegates—all media people—were issued with voting papers and almost unanimously disagreed with our upheld verdicts. But they did not know, and neither did we, that a poll had been taken of a random sample of passers-by—all non-broadcasters—who overwhelmingly disagreed with the professionals and agreed with the commission's original findings. I tell that story to remind us that it is all too easy for professionals to lose touch with what is acceptable to the viewer and listener.
	The second issue is the need for far greater presence and involvement in the nations and regions. The BBC has accepted that, and it looks as though Manchester will be the main beneficiary. The right reverend Prelate the Bishop of Manchester will talk about that much later.
	Above all, I am glad that most of those who have contributed their views to the Government on this year's charter review, including our Select Committee, have backed a further 10 years' funding via the licence fee, albeit with a review half way through. It is surely impossible to envisage the changes, challenges and opportunities that will occur during the period of digital switchover, including the possibility already mentioned by the noble Lord, Lord Fowler, that some of the UK's terrestrial commercial channels will be acquired by foreign broadcasters.
	The value to us all of having the BBC as "an anchorage of sanity"—accountable, yes, but adequately funded to continue its many unique leadership roles during this period—will not just benefit this country's media future but is likely to be of considerable value to the global communications scene as well. I hope that your Lordships will forgive me if I end by saying that I very much support the idea that has been put forward that a permanent communications Select Committee should now be set up.

Lord Peston: My Lords, I, too, start by thanking our chairman, the noble Lord, Lord Fowler. Those of us who have had the privilege of chairing committees in your Lordships' House know how immensely difficult it is in particular to get an agreed report. In my judgment he has pulled off a miracle, at least this time, in getting a totally agreed report. I for one take the Green Paper at its face value despite what the Secretary of State says and despite the remarks that it is all a stitch-up. Whether the Government like it or not, they are going to get full scrutiny of the Green Paper, and we would expect in your Lordships' House to get a positive response to the valid criticisms that we make.
	As others have said, the BBC is world-class. I know of no other UK institution held in such high esteem in the rest of the world—literally no other. However, I agree, particularly with the noble Baroness, Lady Howe, that that does not mean that it is perfect or above criticism—in fact, quite the contrary. What makes it worthy of criticism is the fact that it is so good. If it was complete rubbish why would we waste our time on it?
	I also confess to an earlier error on my part. When ITV was first proposed some 50 years ago, like most economists I took the standard economists' view that there had to be two consequences; one would be a general decline in standards and the other would be a decline in diversity. I will not go into a lengthy explanation of why that economic analysis turned out to be mistaken, but I will simply say that I certainly was mistaken. There has not in my judgment been a general decline in standards, and there has not been a general diminution in diversity. One reason for that is the BBC itself, but it would be wrong in such a debate not to note that ITV and Channel 4 have for many years offered programmes of a very high standard and with a strong public service content. I hope that they will continue to do so. I personally believe that ITV in particular would still find it profitable to meet a public service standard on these matters rather than think that it is costing it too much money.
	However, that is still not the same thing as being a public service broadcaster, which is what the BBC is to its core. It is vital that, no matter what happens in the area of technical advance, we ensure the BBC's survival largely in its present form. The committee said—and was entirely right, as others have said—that for that purpose we must retain the licence fee. I am aware of its regressive nature, as the noble Lord, Lord McNally, and others have pointed out, but policies could be devised to mitigate that to rather a greater extent than we do at present. In broad terms, however, the licence fee was a concept of genius and without it we would not have public service broadcasting. It should every so often be re-examined, but I for one—since it is my professional business to think about these things—cannot come up with a better way of achieving the ends that we have in mind. The costs of collection and enforcement are absurdly large, and something must be done about avoiding that waste.
	I go on to the whole question of complaints. As a public service broadcaster, the BBC must almost ex definitione be the body primarily responsible for maintaining standards. That is what we mean when we say, "You are a public service broadcaster". It follows logically that additional regulation must be the last resort and not something that we rush into. In connection with that, first-class broadcasting of any kind in any area will certainly please many, but it is inevitably going to offend some people. There will always be the complainers. My personal view, wearing my professorial hat, is that I would dismiss most complainers out of hand, especially when it is clear that so many complaints have been orchestrated. But we no longer live in the sort of world where from above you can just say, "I am sorry—you are just talking rubbish". We are not allowed to do that any more, so we must have complaints procedures.
	I always remind people of the standard cliché that all television sets and all radios sets have switch-off buttons. Remotes do not always work, but mostly they do, and you can switch off there. I would not dream of watching "Strictly Come Dancing", for example, but if that is what others want, they can watch it. I simply do not switch it on. That seems to me the nature of the world that we largely ought to live in, and that we should not give in to the complainers. Nevertheless, we have got to have a responsive procedure of some sort. I believe, perhaps even faute de mieux, following the noble Baroness, Lady Howe, that unless we set up yet another regulatory body, Ofcom seems as good a way of doing it as any.
	My next comment—if I am still within time—is on the whole question of value for money of the licence fee. The licence fee payers themselves must manage their resources efficiently and make hard choices. If they choose to do one thing they cannot do another; that is what we all do in our lives. The BBC cannot remotely be excused from that. It, too, must always be under great pressure to be efficient. Therefore, I very much follow what our committee said and what our chairman has said—that at the most extreme an RPI adjustment would be acceptable, but that really cost-minus pressures to increase efficiency are probably an additional force that ought to be at work here. When ITV came to give evidence only this week, it pointed out something that I did not know, which is that the licence fee is per household. If therefore the number of households rises, which is now a sociological commonplace, the BBC gets pro rata a great deal more money. I am not pushing for more one-parent households, but the more households that there are, the more income the BBC will get.
	My last comment is on political pressure and criticism of the Government. A vital task in a free society is scrutiny of what government does. That is also the justification for the existence of your Lordships' House. Our report shows clearly that that can be done without political bias. When I talk about criticism of the Government, I suppose that the Opposition too must be subject to scrutiny. I hope that they will not think that I am being too arrogant when I say that scrutinising the Opposition is a much less important function than scrutinising the Government. I therefore think it is simply a logical error to say that the BBC is biased because it is always scrutinising the Government. That is like saying that all of your Lordships' committees are biased against the Government because they scrutinise them and offer criticisms. That is what the committees are there for. If one of them said, "We have looked at this subject and everything that the Government are doing is perfect", we would assume that the committee had not done its job rather than that it was unbiased. So the Government have to accept that the issue of bias does not arise simply because the Government are being criticised. At least that is my interpretation of what a free society is about. The BBC, despite the pressures, has achieved the kind of unbiased independence that may look biased to others but which is really so admired in the rest of the world.
	I come lastly to the point about the permanent committee. As I think I have amply demonstrated, what we are talking about is not really my subject, and if there were to be a permanent committee, I would not wish to be a member of it. Therefore, I can say totally objectively that this committee has demonstrated overwhelmingly the value of such a permanent committee and the great contribution that your Lordships could make to broader scrutiny of the media in general.

Lord King of Bridgwater: My Lords, I join the noble Lord, Lord Peston, in paying tribute to the committee. I have not served on another Select Committee for a long time, if ever—I cannot remember if I have been on one before—but serving on this one has been a most impressive experience. I pay tribute to my noble friend Lord Fowler for the way in which he chaired the committee and for the extremely well written report—his previous experience may have played its part—which was extremely well spoken to in this debate. It has given the attention to this issue that the importance of the BBC deserves. I join all noble Lords who have spoken in recognising that in the BBC we have a most precious national asset.
	The Government, who at the moment exercise total power over this matter, have a very heavy responsibility to make sure that they do not take any steps that might damage the significance, importance and value of the BBC to our country and, as the noble Lord, Lord Judd, said, to the world. When the committee visited Germany, we asked for critical comments about the BBC. The Germans always started by apologising and saying, "You must remember, they set us up". Public broadcasting in Germany recognises very clearly, and is conscious of the debt that it owes to, the traditions and quality of the BBC, which it admires very much.
	Of course, our purpose is not simply to be cheerleaders. We have a duty to scrutinise. It would take too much time to repeat what my noble friend Lord Fowler said. The BBC cannot be above criticism; it must accept fair scrutiny; it must respect the fact that criticism comes from friends and admirers who want to see success continue; and it must not simply believe that it will always continue without criticism. The licence fee involves a difficult judgment. With the increasing number of channels and choice that exists in broadcasting, there are bound to be questions as to why people who never watch the BBC should be required to pay that fee. Yet, as the noble Lord, Lord Peston, said, it is an invention of genius. I think that there is universal recognition that there is no effective alternative and that the licence fee should stay.
	But at what level should the fee be set? We are allowed to anticipate, even if the evidence has not been published. The Times has published the comment made by Mr Charles Allen, the ITV chief executive, who said:
	"If the BBC got anywhere near the increase they are asking for, it would be ridiculous".
	I shall not enter into the judgment on that. The answer has to be independent scrutiny, so that the BBC has a validation for requests of that kind. It should not be considered a threat. I was chairman of the oversight committee of the intelligence services, which had exactly the same thought: "We can't possibly have these people overseeing us". Ultimately, MI5, MI6 and GCHQ began to appreciate that outside validation and oversight is a strength and not a threat when it is approached in the right way and you have confidence in the representations that you make. When the BBC faces major challenges and major calls and demands on its finance, outside validation is essential.
	If I have a criticism of the committee's work so far, it is that in certain respects we were technologically challenged. We were undoubtedly helped by the presence of the noble Lord, Lord Maxton, who reminded us of the amazing developments that are around—a number of which some of us had never heard of. There is no question that we realised that we face a sea of new opportunities and challenges of quite extraordinary dimensions and that an explosion of variety now exists. My noble friend Lord Fowler referred to our great experience. Many of us, but not all, are of the older generation who are challenged by a number of these developments.
	We established, particularly from the evidence that we took in Bristol, that there are real uncertainties about the changeover from analogue to digital. There is a lot of discussion about "averages"—what the average coverage will be; what the average is that exists under analogue; and what the average will be under digital. But within those averages is an enormous number of people in different places, many of whom are elderly and vulnerable, who may find real difficulties, may feel completely lost and fear that they may lose a very valuable source of communication. For all the surge of broadband that seems to be moving forward, there are real problems coming.
	On one issue there was fundamental disagreement and, most disappointingly, I do not agree with what my noble friend Lord Fowler said in his speech, although I know why he said it and he may be right; namely, that the decision is taken on the governance of the BBC. This cross-party, cross-experience committee—everybody—thinks that the Government are going the wrong way and are not being sufficiently careful to protect the prospects of the BBC or to recognise the strength of the BBC, which could be a very damaging decision. The reality is that we have found no one who agrees with the Government, except for people in the Government.
	I re-read the evidence of Michael Grade, the newly appointed BBC chairman; he said that it was,
	"not the route we would have chosen . . . I think we can make it work".
	I missed this at the time, but I have just re-read that he also said:
	"There are lots of people with theories on how the BBC should be run, quite often from people who have never actually run anything".
	I noted down, "quote DCMS". When one looks at how these things originate, who produces them? Conscientious officials, many of whom have never run anything in their lives, put forward a proposal, get the rolling power of the Government behind it with their majority votes and persuade busy Ministers who are occupied with other things and may not have been closely involved on the subject before. Suddenly we find that that is what we have got.
	I think that Charles I would have been proud of Secretary of State Tessa Jowell's staunch proposal to keep Parliament out of it—stick to the divine right of Kings or Secretaries of State. The idea that it is Queen in Council and Privy Council is an outrageous proposition. Our definition in the report is not quite right. It gives the impression that Privy Council is a pretty active body. It states that,
	"only Ministers of the democratically elected Government of the day participate in its policy work".
	I did not know that the Privy Council had any policy work. It continues:
	"Its day to day business is transacted by those of Her Majesty's Ministers".
	What is the day-to-day business of the Privy Council? It meets once a month standing in front of the Queen, nodding properly. I do not think that I am breaking the oath of a Privy Counsellor in disclosing the terrible secrets of the Privy Council. It is a perfect cover for a government to do exactly what they like, which is why we are having this debate. There will be no other parliamentary process. This is our only opportunity to get this point across. There is sad evidence, including Sir Christopher Bland saying that he disagreed with what the Government were doing, that the battle is lost. Even my revered chairman has said that he thinks that the decision is taken. I hope that we can still fight this issue. There is not a single person—neither of the past two chairmen of the BBC—who believes that. The reality is that this proposition emerged at the worst possible time. It emerged in the chaos that existed during the worst spat between the Government and the BBC. Something had to be done and "here comes a proposition".
	I do not want to be misunderstood, and there is no criticism of the individual concerned, but it concerns me as a former member of the Nolan committee, and I wonder whether I am the only person who is worried that officials move from the DCMS, which put forward the proposals, into jobs in the new structure at the BBC. There is an issue of integrity of government here and I say to Ministers very seriously that it needs to be looked at very clearly.
	We are going forward with a structure that no one from whom we took evidence believed to be the best—the current BBC chairman said that it was not the one that he would have chosen—and that those who have brought any outside experience of trying to run another organisation do not believe will work. We are going to have two chairmen of the BBC, so who will identify who is really responsible? There will be a supervisory board, but it will be part regulator, part supervisor and a real muddle. I hope that that awful pistachio ripple will be promptly melted down and that we will get back to a clear structure of governance and respect. I hope that this national asset that we all value so much is not played on some temporary new management arrangement that could be absolutely disastrous. I warn the Government very clearly that we will watch this very carefully. If they do not change the plan and it goes forward like this, on their own heads be it. It is a recipe for conflict and for real trouble in the future.

Lord Holme of Cheltenham: My Lords, I join the tributes that have been paid to the noble Lord, Lord Fowler. It is true that we would not have had an agreed report without his shrewd and genial chairmanship. I am most grateful for it, and for the way he introduced the debate today. I should declare an interest as a former chairman, following the noble Baroness, Lady Howe, of the Broadcasting Standards Commission and as an adviser to ntl.
	I do not think my speech can compare with the splendid fighting speech of the noble Lord, Lord King, but, like other noble Lords, I look forward to the Government's response to this debate because I think that the notion that we have a done deal is absolutely deplorable. I think that for two reasons; first, because I believe that the committee is right and the Government are wrong and, secondly, but just as importantly, because that is not the way that things should be done in this parliamentary democracy. It is for Parliament to arrive at a proper resolution that the Government, if they are sensible, respect and will think about again.
	Why are we right? First, because we make a proper division between regulation, governance and management, and I urge it on noble Lords who think about issues of governance. If those three streams run together, as is proposed in the present arrangements, it will be a recipe for bad outcomes. Secondly—here I disagree with my noble friend Lord McNally about Ofcom; fortunately in the Liberal Democrats disagreeing with your leader is not a hanging offence, or, at least, I hope that it is not—it seems that in its relatively short life Ofcom has reached maturity and is operating well and making good decisions. I remind noble Lords that Ofcom is not an economic regulator; Ofcom is a broadcasting regulator—indeed, it is a communications regulator. That was discussed at length in your Lordships' House and we quite specifically identified that Ofcom had a duty to us as citizens and not just as consumers. What is more, as the noble Baroness, Lady Howe, reminded us, we put in a content board. If Ofcom is to play the role of last resort—and it is a role of last resort, as the noble Lord, Lord Peston, said—it is extremely important that that pillar, if you like, of the content board in Ofcom is strengthened in the way that the noble Baroness described. If that condition is met, I think that it is far better that that ultimate regulation happens in a regulatory body and that the BBC is responsible for its own governance and the executive of the BBC is allowed to get on with managing it. Then we have a model that has some chance of working.
	In the light of the Government's attitude so far, we are all the more right to go for a statute rather than a Royal Charter. But if that is the case, it puts a heavy responsibility on Parliament. We all know that the disadvantage of Parliament being the body of accountability and the body that discusses the statute is that it is not immune from fits of moral panic, and we do not want our great BBC exposed to the dangerous dogs effect. So how do we effectively insulate Parliament? One of the ways is to establish the sort of committee that has been recommended by one or two noble Lords in this debate.
	I shall spend my remaining time talking about the sustainability of the BBC as we look ahead in this entirely new and rapidly changing world of communications. Like the noble Lord, Lord Judd, I am a child of the BBC age. During the war, I remember listening to the news—which was "the news" and not "the BBC news"—and asking my grandfather, "What's on the news when there isn't a war on?". I am giving away my age, but I remember "Norman and Henry Bones"—in which I think the Shakespearian tradition of girls being played by boys was reversed with one of the boy detectives being played by a girl—and "Dick Barton: Special Agent". They were an important part of my childhood. We have all seen the BBC evolving over the decades from Reithian paternalism to Dykeian populism. We have seen great changes in the BBC in our lifetime but, on the whole, they have been the changes necessary to adjust to the age. So I am speaking from enormous personal affection for, and dependence on, the BBC. I want it to thrive and survive in this new global market of digitisation, technical innovation, convergence and unprecedented competition. What does it take to make the BBC survive?
	In my view, several attributes are needed for sustainability. First, we must have a leaner BBC. The BBC is still in many ways not just a great broadcaster, but also a great bureaucracy. In many ways, it has mirrored the Whitehall departments that have tried to interfere with it over the years and has created a matching bureaucracy. We must see a shift in the BBC to an inflation-minus model for bureaucratic costs and, to the extent that we tilt the budget of the BBC, it must be towards its output and production, not towards its bureaucracy. We need a business model that works for the BBC in this new competitive age because, beyond the licence fee, into the misty future, it is quite clear that for the BBC to be a successful organisation, it must be as lean as any commercial organisation in performing its functions.
	Secondly, we need more focus in the BBC's programming. One of the interesting things about the transition, which the noble Lord referred to, from the monopoly of the BBC to the duopoly of BBC and ITV in the 1950s and 1960s, was that the BBC felt obliged to be universalist and to check off competition wherever it popped up. Therefore, we had masterly schedulers in the 1960s and 1970s in the shape of people such as Brian Wenham and Michael Grade himself who knew exactly how to fight across the schedule and make sure that the new commercial interests were kept at bay in the interests of preserving a large BBC audience. From that, we have produced a BBC that feels that it has to do everything in every genre and on every platform and has to be everywhere. I do not believe that that is the right decision for the BBC. I think that the BBC has to produce high-quality programmes that are the best in their class and focus its efforts more closely.
	Thirdly, the BBC needs to look at the emerging global market. There is an enormous demand for high quality, English-language broadcasting. The demand is almost infinite. The BBC has made some efforts, but it has not made enough effort or the right effort. Many people have said that maybe the BBC should at some point in the future morph into more of a global publisher of high quality programming, but if we are to do that, we must take full advantage of the demand from all over the world for high quality English-language content. In that context, I yield to no one in my admiration for the World Service; we are now looking at the question of whether the Arabic channel should be paid for by cutting valued services in other languages.
	All that comes under the rubric of something called public diplomacy. I am very unsure about the notion of public diplomacy. I am sure that the Government know all about it but, to me, it suggests a lot of distinguished old coves with stars and garters on exchanging gossip over the gold-wrapped chocolate. That is just a personal impression. To the extent that the World Service has a public goal, it must be to spread the values, culture and civilisation of this great country around the world and, in the process, produce revenue that can help the British licence payer.
	Finally, the BBC needs to be more politically independent in the context of accountability. Freedom implies responsibility, and the BBC, in striving for independence, needs not just to produce its current affairs and news in the context of debate and a theatrical adverseness. We get enough of that in our politics already. We need from the BBC a greater attempt to encourage civic understanding. We certainly need to remove the pressure points that the Government use on the BBC: the appointment of the chairman; the renewal of the charter; and the licensing of new services. Our report deals with all three.
	If we can have a leaner BBC, a more focused BBC, a more globally exploitative BBC and a more politically independent BBC, it will have a sustainable future not just for the whole of this century but in the next one as well.

Baroness O'Neill of Bengarve: My Lords, I too wish to add my thanks to our chairman, the noble Lord, Lord Fowler. Your Lordships' House is full of people who are rather experienced at taking the chair. The Select Committee was a class act and it was a speedy act; that is to say, we came on the scene rather late in the day. A great deal was already in the public domain in the way of proposals for charter renewal or alternatives to charter renewal at the point when the Select Committee began its inquiry. The issues were of course complex.
	Looking at the range of positions taken, I find remarkable the high degree of agreement there nevertheless was about the objectives. We did not dispute any of the widely held objectives. We thought throughout that the quality of the BBC, including the accuracy of its reporting, must be preserved; that accountability to the licence fee payer must be strong, indeed stronger; that independence from government and from commercial interests must be secured and maintained; that the corporate strength of the BBC must not be used to undermine commercial broadcasters or small, independent producers. Moreover, we were well aware, although not all of us were techno-wonks, that these objectives would have to be met through the period of digital transition and beyond.
	As the House has heard, we concluded that these objectives would not be best achieved by implementing the proposals set out in the March 2005 Green Paper, Review of the BBC's Royal Charter. A strong BBC, independent of government. We did not of course disagree with the idea of a strong BBC independent of government; it was the assumption that the renewal of a Royal Charter was the highway to that objective that we came to query.
	I shall comment today only on the relative roles of governance and regulation. Other noble Lords have said a great deal on other aspects of these matters. I do not underestimate the importance of strong management or the thought that strong management also includes strong financial disciplines. Broadly speaking, we thought of governance as particular to institutions, where those with responsibility for governance are charged with holding those who manage to account. For an institution as large and as influential as the BBC, governance is a very large task, commensurate with its complexity. We noted that the BBC had already taken steps to strengthen the role of the governors, indeed to change the name, and to consolidate their independence from management. We noted also the Government's proposal, but we thought that more could be done. In particular, we thought that the governors or the trust or the board, whatever it comes to be called, had to take greater responsibility for ensuring not only the BBC's independence from government, but the standards of its work. That may seem obvious, but we were all too well aware that the Hutton report centred on allegations of BBC inaccuracy, to which the then governors had responded by defending the BBC's independence, but without taking steps to check the accuracy of the disputed matter. Their focus was always on independence and not on accuracy. We concluded that measures for securing accuracy, including the prompt correction of mistakes that inevitably occur in reporting, need not in any way compromise independence.
	We have put forward various proposals for strengthening governance so as to combine independence and accuracy. They are hardly novel. Central to what we recommend is that the BBC bind itself to the same standards of process and conduct as have been introduced elsewhere in public life, and that these be central to its governance and through its governance to its management. I give two illustrations.
	We propose that the selection panel that appoints the Chairman and board members of the BBC have a majority of non-political members and be chaired by a non-political member who is not a civil servant; that it work to the Nolan principles which are ordinarily understood and respected now; and that it recommend a short list of one to the Prime Minister. That number is important.
	Secondly, we recommend that the BBC seek to ensure that the Nolan principles for conduct in public life are strictly observed within the BBC. Those responsible for BBC programming should stand down from making a programme or a report wherever they have a direct, financial conflict of interest. They should be required publicly to declare their relevant interests. A website would make that easy. They should have the same standards for recognising conflict of interest—namely, that an interest would reasonably be perceived as influencing their reporting and programme making—as the rest of us are required to observe in public life. These are nowadays the routine disciplines of public life. We saw no case for thinking that influential programme makers, managers or journalists should continue to be exempt from them, least of all in the BBC.
	Complaints about the BBC are another matter. At present, the responsibility for adjudicating complaints is divided a little awkwardly between Ofcom and the BBC. This needs clarification. As in other areas of life, it is entirely reasonable to provide a way of appealing those complaints that are not resolved to the satisfaction of the complainant to a more independent body. The choice of Ofcom is simply to avoid the needless multiplication of regulators. It is essentially a minor adjudicative matter.
	However, we concluded that ensuring the accuracy of the BBC's reporting is and must remain a central governance issue, and not become a regulatory issue. Regulators cannot ensure accuracy and they cannot monitor output for accuracy on a day-to-day basis. Ofcom will not become Reuters. Even a marriage of Ofcom and Reuters could not carry the task. More broadly, quality is a governance issue and not a regulatory issue, because regulators cannot ensure quality or monitor quality on a day-to-day basis. The distinction is that complaints affect individuals—it is part of consumer protection to provide a complaints procedure. Ofcom is well placed to take that on. But good broadcasting, that is of a high quality and accurate, is a public good which is not secured by a complaints procedure.
	Noble Lords will have detected a slight area of uncertainty in some of the comments of members of the committee about the role of Ofcom in so-called "content regulation"—we should always keep scare quotes around the phrase "content regulation". We agreed that if Ofcom develops a stronger content board—that is very much for the future—it might be able to take on a stronger role as a so-called "content regulator" for BBC television and radio, parallel to the role it takes with respect to other public service broadcasters. However, the type of content regulation assigned to Ofcom by the Communications Act 2003 is quite limited. It is more concerned with policing a limited number of prohibitions and ensuring that broadcasting broadly fits certain defined public service broadcasting quotas and commitments than with quality or even accuracy of content within those quotas. Although Ofcom has explained that it will,
	"examine issues where the citizen interest extends beyond the consumer interest"—
	and I hope that it will do so—the forms of content regulation that it will then be equipped to take on will not in any way reduce the need for the BBC to treat quality and accuracy as fundamental matters of governance. Ofcom's additional competence for so-called "content regulation" with respect to the BBC would still lie within the competences assigned by the Communications Act, and those in charge of the BBC would therefore still have the primary, central and fundamental responsibility.
	It has been curious to conduct this inquiry while knowing that it is widely said that the Government have already reached conclusions on the most fundamental matters. I can only hope that they will also listen to the arguments that we have put forward.

Baroness Gibson of Market Rasen: My Lords, I begin by thanking the noble Lord, Lord Fowler, for chairing the Select Committee in a most efficient but relaxed manner. I have thoroughly enjoyed working with him and other colleagues on the committee. I had not had the pleasure of working with him before, but I would not hesitate to do so again.
	It has been a learning curve for me as I have listened to the BBC itself, its friends and its competitors giving us evidence and, on occasion, advice. I have always been a keen supporter of the BBC in its entirety, and I have previously spoken in its support in this House. My belief in the BBC has been reinforced as we have taken our evidence. The BBC seeks to inform, educate and entertain, and it succeeds. As has already been said, it is a great part of our culture. We should be justifiably proud of it—and we are, as today's speeches show.
	Our aim during this review is to decide whether the Government's Green Paper proposals will deliver a strong BBC, independent of government. Our first conclusions are the proposals in this report, and I join with others in hoping the Government will treat them seriously. I agree with much in the Green paper, but there are some issues with which I disagree, as does the committee. I want to confine my remarks to the proposals relating to the board of governors, the BBC Chairman, the complaints procedure, and, finally, the effect of change on BBC staff.
	I will start with the need for clarity about the role of the board of governors. I do not support the proposals in the Green Paper, outlined so clearly by the noble Lord, Lord Fowler. I believe that these proposals would be both confusing and unwieldy, and I am not alone. Respected witnesses who gave evidence to us enhanced this view. The noble Lord, Lord Burns, highly respected for his knowledge of governance, did not believe the proposals go far enough in relation to the separation between governance and regulation. I agree. Sir Christopher Bland described the proposals as,
	"an uneasy compromise between a regulatory body and a two-tier kind of governance, as in Germany".
	I agree. I totally support the committee's proposals for two clearly distinct bodies, and I am sorry that, even before we have finished our review, the Government seem to be indicating that they will stick to the Green Paper proposals. I ask them most sincerely to think again.
	In the same way and for the same reasons, I do not accept the proposals in the Green Paper relating to two chairmen of the BBC. There would be obvious problems with this proposal. For example, to whom would the chief executive report? If there were conflicts between the two chairmen, who would adjudicate? Michael Grade and Sir Christopher Bland, both knowledgeable and expert witnesses, talked of the proposals as "a recipe for conflict" and spoke of "two chairmen raising difficulties". Again, I support the report's proposals for one Chairman of the BBC board, with a majority of non-executive members on that board. This would sit above a BBC management committee chaired by the Director-General and consisting of senior executives. Such a format would be clear and uncomplicated in comparison with the Green Paper.
	I turn to the handling of complaints at the BBC. I know that the BBC complaints system has been reviewed already and that alterations have been made, and I welcome that. However, the Green Paper proposals could cause unnecessary complications. It is vital that, if complaints are made, they are dealt with quickly and openly. Only then will there be confidence in the system. To allow complaints to be made to both the BBC and Ofcom is not a helpful recipe for such confidence. Our belief is that the BBC should be able to answer all complaints against it in the first instance. If that does not bring satisfaction to the complainant, a single transparent and, above all, independent body should be available for complaints on BBC content and services to be appealed and finally adjudicated. Perhaps this could be Ofcom; I have a question mark over that. Again, the need for clarity in such a system is paramount.
	Finally, as a former trade union official, I obviously have in mind the workers in the industry as we contemplate changes within the BBC. This applies in particular to the proposals relating to the BBC World Service and their effects upon staffing. The World Service is a flagship for the BBC, and highly respected around the world. The unions representing BBC workers recognise that as the political and cultural world changes, so must the World Service. It is therefore seen as logical, as the BBC put it in a letter to the committee last October,
	"to review the non-English services in areas where the media marketplace is less developed, and where audiences have a greater need for impartial independent sources of news and information",
	such as the Middle East.
	This will obviously affect the workforce. The BBC has pledged to support all staff facing redundancy as they search for alternative employment, and I understand they have agreed a compulsory redundancy package with the unions under the auspices of ACAS. However, there will be no compulsory redundancies until December 2006, and there will be what is described as:
	"appropriate compensation for eligible staff".
	As our review continues, so will the BBC's reorganisation of the World Service, and I hope the transition will be as painless as possible for those affected.

Lord Gordon of Strathblane: My Lords, I join your Lordships in welcoming the report and paying tribute to the chairmanship of the noble Lord, Lord Fowler. The committee has served the House well, not least in the way in which nine members of the committee have justified the committee's findings in today's debate. They have also remarkably addressed separate aspects so that, with the single exception of the justifiable tributes to the chairmanship of the noble Lord, Lord Fowler, there was very little repetition among them. Each one handled a different aspect, which has greatly enriched the quality of this debate. They have fully made the case—if, indeed, it needed to be made—that we need a permanent Select Committee on broadcasting and communications.
	In a modern democracy the only encounter between the governed and the governing occurs in the media. It is vitally important that they do not become the weakest link in the democratic chain. We need a committee to look at that on a regular basis. I want to make four basic points, the first on governance. Throughout the passage of the Ofcom legislation I argued that the BBC should be fully under Ofcom and that Ofcom should be structured with that in mind. I concede that some changes would have to be made to Ofcom to ensure that it was capable of having the BBC as part of its remit. I adhere to the view expressed then that it is in the BBC's own interest that it is fully under Ofcom. To leave it partially excluded from Ofcom leads to an increasingly convoluted management system within the BBC which will impair the optimum delivery of BBC services on a day-to-day basis and still leave many people unhappy that the BBC somehow still remains judge and jury.
	We should all remember that the BBC is already fully under Ofcom in respect of tiers one and two with the single and somewhat bizarre exception of impartiality for the Secretary of State. I never regard politicians as great guardians of impartiality but the Secretary of State is the guardian of impartiality in that regard. How can a Minister ever make up his mind on whether a new service should be sanctioned or refused without regard to the ecology of the whole broadcasting system, of which Parliament has decreed Ofcom as the guardian? The system I have mentioned makes sense for everyone concerned and then we can get on with the important distinction made by the noble Baroness, Lady O'Neill—all of the key issues are governance issues not regulatory issues, and those should be left with the BBC to enable it to go on doing the very good job it currently does.
	The second point I want to make concerns the licence fee. It is refreshing that very few people have argued against the licence fee, however difficult it is to justify a universal imposte on people who may not use the BBC at all. It probably should be called the television licence fee, not the BBC licence fee. There might be a debate about that at some time. The quantum of the licence fee is another matter. I prefer the solution of a committee being set up on a periodic basis to look at the whole situation and come up with an answer. I, together with the noble Lord, Lord Lipsey, who is due to speak immediately after me, was a member of the Davies Committee which did exactly that a few years ago.
	It is worth remembering that the settlement that emerged was more generous than that proposed by the committee. The BBC licence fee was going to be "RPI-minus" for the past two years. Therefore, moving to "RPI-neutral" was a benefit in itself. Adding 1.5 per cent compounded the situation, in fact it was a somewhat over-generous settlement and has caused a degree of unnecessary dissatisfaction among the BBC's competitors in broadcasting.
	The issue of the licence fee also relates to the scope of the BBC's services. There is difficulty with that because no one can criticise any of them in isolation, except that they impact on other people who are also trying to provide services. I adhere to the fundamental point that has been echoed by many noble Lords: public service is not the monopoly of the BBC. Indeed, we live at a point in time when, not only in broadcasting but throughout business, more and more people lay greater emphasis on corporate social responsibility. People are realising that doing good for the community you serve, as well as the customers you serve, is to your advantage in the long run. Therefore, in those circumstances we must be careful that we do not have a sort of "mission creep" from the BBC whereby the effort to provide public service starts not only in broadcasting but in various other ways, all entirely laudable, but that essentially prevent someone else doing that worthwhile job. So we must be careful of that.
	The final issue that I want to raise was alluded to by my noble friend Lord Maxton. I would have liked the committee's report to expand on the section, "Building digital Britain", because I really do think that huge issues are raised by that. Until 1990 the transmitters were owned by the BBC and the Independent Broadcasting Authority. The independent television companies were not allowed by government to own the transmitters. It was felt that ownership of the transmitters was important. That changed in 1990 and they were privatised. The BBC's transmitters are now owned by Crown Castle, an American communications company. I do not know whether that is important. Incidentally, the BBC was allowed to keep the proceeds of that privatisation to help the digital switchover and I hope that that sum is accounted for when we consider what more might be required to achieve that.
	My point about digital transmitters has two elements. First, does it matter who owns them? I am agnostic about that, but if it does not matter, there is a second question: is digital terrestrial transmission the best way forward? If in the days of Lord Reith in 1926 we had had broadband with its current capacity, satellite transmission and cable, would we have set up a network of digital terrestrial transmitters? I live in an area that is not remote but is outside the main conurbation of Glasgow. The cost of the transmitter that serves our area was huge. It benefits my household and a few others, but it was set up as part of the public service remit because, after all, universality of provision was a key ingredient of public service—that transmitters should reach everyone, no matter what the cost. We are huge beneficiaries of that in the part of the world that I come from in Scotland. The cost per head of transmission is high; but we now have other technologies. Is it right that we should ask the BBC, which is platform-neutral regarding the provision of its programmes, to support only one platform which is, arguably, the least effective one for the future? Finally, that could be the subject for the next inquiry of our Select Committee on broadcasting and communications.

Lord Clement-Jones: My Lords, I add my congratulations and thanks to the noble Lord, Lord Fowler. I can do that with even greater force at the end of a debate when he and his committee have elicited such a magnificent collection of lively speeches. It has been fascinating debate, and an extremely well informed one. We should all feel extremely grateful to him.
	Like the overwhelming majority of the public—and, clearly, the majority of noble Lords who have spoken today—I am a passionate but not uncritical supporter of the BBC. As we have heard, the BBC has, over the years, been at the forefront of quality broadcasting. It delivers a huge range of local and national quality services on radio, television and the Internet for the price of a licence fee, which all the polls show that the British public are very happy to pay.
	Over the years, and particularly in recent times, the BBC has had to adjust to change. It has become rather skilled at adapting to change. It was first to encourage the use of computers in schools. More recently—as many noble Lords, particularly the noble Lord, Lord Maxton, have mentioned—it has promoted the whole range of technology, such as Freeview and the new digital channels, DAB radio, BBC online and, of course, more recently, podcasting and streaming. I am sure that everybody is getting to grips with the latter two in particular. We are now seeing a dramatic uptake in digital television, largely as a result of some very bold decisions made by the BBC.
	I have been extremely fortunate in my career, in having had a grandstand view of—or close encounters with—many of the individuals who have played a key part in the development of the BBC over the past 15 years. In the mid-1980s, I worked at LWT with almost all those who had a major influence: the noble Lord, Lord Birt; Greg Dyke; and Michael Grade. There are many stories to tell about how they all got on within the same institution, which each of them successively has had such a big part in influencing.
	Noble Lords, I think without exception, have today expressed their concern to retain the independence of the BBC. Implicitly or explicitly, the Hutton report and its aftermath are only too present in our minds. I hope the noble Lord, Lord Peston—I read some of his evidence—would agree that this has not been a rehash of the Iraq war, or anything of that sort. We need to keep the dangers of government interference and news bias at the forefront of our minds, however. We have had enough bad examples of this. My particular horror story is Fox News, whose viewers in the US, when surveyed, seem to live in a parallel universe. They believe that weapons of mass destruction have been found in Iraq. They believe that the US had the support of the rest of the world in invading Iraq, and that there were proven links between al-Qaeda and Saddam Hussein. That is quality news broadcasting we should beware of.
	In that context, paragraph 26 of the report is important. It is worth repeating. It states that the events surrounding the death of David Kelly and the subsequent inquiry by the noble and learned Lord, Lord Hutton,
	"are relevant to our inquiry because they suggest that the BBC's current constitutional and funding arrangements are not sufficiently robust to prevent unease within the BBC about its future should it upset the Government of the day".
	That is an important conclusion of the committee. Pressures on public service broadcasters will grow, so the governance and regulatory structures will be ever more important and need updating. The financing of the BBC must continue to guarantee independence.
	The charter renewal process has given rise to some high quality reports, as we have heard today: the report of the noble Lord, Lord Burns, the independent adviser to the Government—I, too, am sorry that he has not managed to take part in today's debate—the BBC's response to the Green Paper; the Green Paper itself; and now, the icing on the cake, the Select Committee report.
	We should be able to have a genuine debate on all the areas covered by the charter. Many noble Lords have expressed outrage about this. I share that outrage. It is unfortunate that the White Paper has been delayed, but it is doubly unfortunate that the Government have attempted to ring-fence parts of that debate, not least in the structure of governance and regulation. That is where the greatest debate lies and we should be able to deal with it at greatest length. Indeed, the committee probably did so.
	Definition, demarcation, regulation and governance are vital. I agree with much of what was said by the noble Lord, Lord Lipsey, but I do not agree that it is not possible clearly to define what is meant by "governance". The committee managed that very well. Many noble Lords have made the point that we are not talking about dealing with day-to-day complaints in a regulatory body, but about a court of last resort, as mentioned by the noble Baroness, Lady O'Neill. We are talking about ensuring that commercial activities are operated competitively as regards market practices, fair trading and so on and that the BBC generally sticks to its overall remit under the charter.
	The Government, in their Green Paper, postulated that those two functions of regulation and governance can be merged within the BBC trust and be the successor to the board of governors in taking over those roles. Despite that, the Government have decided that the issue has White Paper status and is not subject to change in the debate. I can add to the Select Committee a list of those who have disagreed with the Government. It includes the Government's own independent adviser, the noble Lord, Lord Burns, who believes that governance and regulation must be separated out; Sir Christopher Bland; and Greg Dyke, let alone those on these Benches.
	In principle, the regulation of the BBC needs to be carried out separately from governance. It has been interesting hearing different sides of the argument and we disagree on who carries out that regulation. We believe that there should be a public service broadcasting regulator and others believe that there should be a separate BBC regulator. Of course, the committee believed that the overarching function should be carried out by Ofcom. I agree with the noble Lords, Lord Burns, Lord Dubs and Lord Lipsey, and my noble friend Lord McNally—this is strong testimony—that Ofcom is not the right body to carry that out. The testimony of the noble Lord, Lord Burns, was especially strong on that. The job that has to be done with the BBC is sufficiently different from the job Ofcom does with the commercial broadcasters that there is a strong case for having separate organisations. There should be a separate body. The noble Lord, Lord Burns, also believed that the Government's proposals did not go far enough in separating governance and regulation.
	In the face of government unwillingness to debate the issue, it is hardly surprising that the Select Committee recommended that the charter should be replaced by an Act so that there would be some genuine parliamentary debate on the content of the licence. The proposition may not be wholly persuasive at this stage, but it definitely needs examination and discussion. The more that the Government try to close down debate, the more plausible will become the argument made by Select Committee for an Act of Parliament.
	I fully understand the desire for a charter to provide certainty—indeed, we strongly support a 10-year licence for the BBC. However, I wonder whether the use of the Royal prerogative—that is what it is—without Parliament being able to debate the context of the charter, is appropriate in modern times. Perhaps in this House we have greater faith in parliamentary scrutiny than they do in the other place. On other aspects of governance proposals, Greg Dyke described the idea of an executive committee with a non-executive chairman and other non-executives as a recipe for warfare. With his experience in commercial life and in the BBC, that is strong testimony. Ultimately, it all seems to be set in stone and we all wait expectantly for the Minister to tell us whether that genuinely is the case.
	On funding, we agree with the Government, as did the Select Committee, that we should continue with the licence fee. I am not sure that I would go so far as the noble Lord, Lord Peston, and talk about the concept of genius. It is as good as it gets, but I am not sure about the genius element. And it should not be top-sliced to pay for other public service broadcasting. There is the timing of the licence review issue. But, on any basis, we on these Benches believe that any new system should not come into place, even if agreed, until 2017.
	However, with funding—a number of noble Lords have made this point—goes the need for public accountability. We agree with the idea of the NAO being responsible for securing that accountability for public funding. The noble Lord, Lord King, made that point extremely well. On the other hand, we on these Benches do not believe that it is fair or reasonable to expect the licence payer to pay for digital switchover. I thought that the noble Baroness, Lady Buscombe, made that point very well.
	But, if you have a public service broadcast regulator and you have a situation where the BBC does not have a monopoly of public broadcasting, which is highly desirable—I am as big a fan of Channel 4 as I am of the BBC—you have to work out how we pay for it. If we have to subsidise other public service broadcasters, how do we go about that? We have had some suggestions of an enhanced licence fee, the top-sliced fee which I have said we are opposed to, and some, like Ofcom, have suggested the idea of a public service broadcaster. But for that to work means a new source of funding and, of course, we are not there yet. There is still great uncertainty about what source of funding that would be—is it sales of the analogue spectrum? Who knows, at this stage? We need to wrestle with that issue at a very early stage.
	One very interesting thing—it often happens in debates like this where we are so taken up with certain aspects of the charter—is that we have not talked in great detail about what public service broadcasting is. I thought that the Green Paper, if I dare say it—it is one of the few really good things about the Green Paper—properly dealt with that. The definition of PSB in that was well set out, because you cannot win. Basically the BBC often gets berated for having too-high ratings, and in that case it is too popular and competing too heavily with ITV, or its ratings are too low and therefore it is not a popular channel in terms of public appreciation. It is either too highbrow or too popular. I might as well declare that I am a fan of "Strictly Come Dancing", along with a number of other noble Lords, and I think that that fits perfectly into the public service broadcasting remit.
	A number of noble Lords have made important points about the commercial activities of the BBC. There is a borderline area between public service broadcasting and commercial activities—and ITN and a number of commercial broadcasters are extremely interested in where that divide comes. It is extremely important that the BBC should not be immune from competition law where it engages in commercial activities. So we support a continuing role for Ofcom on competition matters and a remit in that area, despite the fact that there would be a separate public service broadcaster. Greater definition will become increasingly important over the years with clips on mobile phones. Should the BBC be allowed to give its clips away, or will it be commercial and therefore others in the marketplace can compete properly?
	This has been a fascinating debate. This is one of the most important aspects of British culture and of quality of life for people in this country. I hope that the debate continues and that, artificially, we do not find ourselves having that debate stifled by government.

Viscount Astor: My Lords, the report of the Select Committee, chaired by my noble friend Lord Fowler, is an impressive piece of work. His committee will go on to look at the role of the BBC with regard to the nations, the regions, the World Service and the broadcasting of religion and sport. We all look forward to its next report.
	We can all agree with the remarks of the Secretary of State, Tessa Jowell, in her foreword to the Green Paper:
	"Government recognises the enormous contribution that the BBC has made to British life and culture, both at home and abroad. We also agree with the majority of British people who want to see that contribution maintained into the multi-channel future".
	She could have added that that contribution has been due to successive governments' generous funding.
	I start from the premise that the BBC has never been properly accountable to Parliament. It should be accountable to Parliament rather than just to the Government. We have debates in this House on the charter and the agreement every time renewal comes up. The government of the day listen carefully and then equally carefully ignore all the views expressed in this House. The Commons have a debate and a vote—not on the charter, but on a minor broadcasting order required to implement the agreement. Although the BBC believes in accountability in theory, in practice it prefers to get as close to government as possible, believing that that is its best chance of a good outcome for the licence fee or for charter renewal.
	However, under this Government the BBC has finally seen the light and now realises that getting too close to government can be dangerous. The fallout from the Iraq war clearly demonstrated the importance of political independence. As my noble friend's Select Committee report noted:
	"Prime Ministerial hostility to the BBC has a long history".
	I have always believed that the BBC should come fully, rather than partially, under Ofcom. It has much to gain and nothing to lose by being subject to proper regulation by a professional regulator, rather than relying on the whims of a particular Secretary of State. There is a view in the BBC that it is impossible to be independent unless the BBC is solely responsible to its governors. That shows a stunning lack of understanding about what happens in the real world. Public companies are subject to the Stock Exchange, fund managers to the Financial Services Authority, and there is an "of-something" for almost everything. The list is endless, but that does not make any of them less independent. The BBC should also remember that it is not the only public service broadcaster. Channel 4 and ITV also have a public service remit and are independent and accountable to Ofcom.
	I want to make the BBC truly accountable to Parliament, independent of government and accountable to licence fee payers. So there is a case to be argued that the Royal Charter and agreement are outmoded and that the BBC should be set up by an Act of Parliament. Establishing the BBC by Royal Charter through the Privy Council gives ultimate power to the Government as they decide what goes into the charter and the agreement. As the Select Committee report notes, an Act of Parliament would be more democratic, independent and transparent, with all-party involvement rather than that of just one party. I issue just one caveat: an Act of Parliament should not be used to go beyond setting up the overall public service remit. Parliament would have to resist the temptation to be overprescriptive, otherwise we might find that we had encouraged censorship by the back door.
	I agree with all noble Lords who spoke today that the licence fee is the best way to fund the BBC; it provides a stable and secure base. We should review the concept of the licence fee in the future but, as none of us knows how broadcasting will develop, it is pointless to speculate on that now. The fundamental reason is that none of us knows how we will receive in the future the multitude of programming out there. I am not sure now how I know what I want to watch; it comes through the ether. I might read about a programme or hear about it on the television or radio, and I am not terribly conscious whether what I want to watch is on the BBC, ITV or a satellite channel. I just tune in to or record the programme that I want to watch.
	Developments in broadcasting, whether terrestrial television, cable, satellite, Internet or telephone, have taken away the power of the schedulers and given it to us, the viewers. A recent essay on broadcasting, The Shape of Things to Come, summed up well how the future will be:
	"TV is about to come of age. Here at the start of the 21st century we are just reaching the point where television bursts its shackles and sets us all free. No longer will we sit passively on the sofa with nothing better to do than watch topless darts. We will snatch television from the grasp of the broadcasters and make it our own".
	The Government have given the BBC the role of leading the introduction of digital television with the goal of analogue switch-off, which is right. I am less clear about the cost and effect on the licence fee. What is the Government's estimate of the costs of digital switchover? I am interested to know that. Does the Minister agree with the BBC's estimate of £1.2 billion for the cost of developing new digital services? We should consider the effect on other broadcasters and their viability after switch-off, particularly Channel 4. Does Channel 4 need be given additional terrestrial digital capacity? It has a strong case. What is the Minister's estimate of the costs of developing digital services for Channel 4, Five and ITV? That is important. Ofcom has pointed out that it is important that the BBC does not become the only public service broadcaster.
	I share the concerns that analogue switch-off should be funded solely by the licence fee. That requires more thought. I would like to hear from the Minister what the Government expect to make from the sale of the spectrum following its release once analogue broadcasting ceases. Is it the £1 billion or £2 billion referred to by my noble friend? What is the Government's justification of the Chancellor's proposed spectrum tax? Does this not just add to the cost of the licence fee? This is an important issue. Nearly 10 million homes do not have digital television and 2 million will need new aerials. Some households will not be able to receive terrestrial digital services and are not allowed to put up a satellite dish. What will be done to help them? What will they do? Many—pensioners, for example—will need help. Who will be responsible for seeing that they get it? Will the Minister give us an assurance that his department will take full responsibility for that policy?
	The Select Committee was right to suggest that any increase in the licence fee should be assessed by the National Audit Office. Indeed, the BBC should come under the remit of the National Audit Office. In the past, the sponsoring department, DCMS, has had that role. Having been there on a previous occasion, I know that it does not have the experience, knowledge or resources to do that.
	The Government's plan to have two chairmen for the BBC is totally muddled. There must be a clear separation between management and governance, but whatever the outcome the result must be simple so that it is understandable by all of us who pay the licence fee. I find those proposals not clear at all. Ofcom should have final responsibility for adjudicating on appeals arising from complaints, but it must be the job of the BBC to respond to all complaints in the first instance. That must be the sensible way to go forward. Ofcom's role would strengthen, not weaken, independence from the Government. It does not take away any of the BBC's responsibility for content.
	If I have sounded critical of the BBC, I am not. I am a great supporter. But, as my noble friend Lord King noted, that should not prevent me or anyone else advocating change. I give one example, which is important but perhaps not the most important issue facing the BBC. The new head of BBC sport wants test cricket back on the restricted list. I find that bizarre. The BBC gave up broadcasting test cricket. It was taken on by Channel 4 and Sky, which enabled a very large sum of money to go into cricket in this country. The England and Wales Cricket Board was able to build its training centre at Loughborough. Those are the reasons why we did so well and reclaimed the Ashes—money and training. Now Channel 4 has dropped out and Sky continues. Suddenly cricket is popular and the BBC wants it back, but it is not prepared to pay the money. The English cricket board and other sporting bodies must have the freedom to decide how they want their sport to be broadcast—whether pay-to-view or free-to-air. The BBC did nothing to help English cricket and has no claim on its future.
	Having said that and got that off my chest, I turn to what is really great and wonderful about the BBC. It is British broadcasting at its best—whether that is drama, news or current affairs. The World Service is renowned worldwide for its impartiality. The BBC should continue to offer the widest selection of programmes. I am glad that the concept of audience "reach" is now at least on an equal par as audience "share". The BBC develops the talent that enriches our cultural life. It is ours, and it cannot be owned by anybody else, as many noble Lords who have spoken in this debate have pointed out.
	However, the arrival of digital services for television and radio and the arrival of broadband have opened up a whole new world. Content is, and will be, king; delivery mechanisms will become less important. Not only can we watch almost anything we want, but anybody else in the world can watch our television. It is not just the World Service that can be seen round the world from Timbuktu to Turkmenistan, but anybody in this country or abroad can now download a BBC news programme. One effect of this is that the BBC is now going to compete on the Internet with newspapers as well as other broadcasters. As my noble friend Lady Buscombe said, we need to consider the market impact and consider whether this remains a part of the core of the BBC or is just part of a commercial venture. The BBC's unregulated expansion of new online services has already affected commercial operators. Equally, we must ensure that the BBC has access to the broadcast platforms and to the electronic programme guides that it needs.
	The Government still have to answer a crucial question about the future regulation of the BBC: as commercial broadcasting does more and produces more content, all made available to consumers in more ways, what should the BBC do? Should it do more or less? Today, almost every time that the commercial sector produces a new service, the BBC wants to be part of that new development. Earlier this year, the director-general was quoted as saying that digital media are erasing simple distinctions such as public service and commercial boundaries. He went on to advocate a new, online music download service on the BBC. So we should ask whether, as technological and programming possibilities become virtually limitless, it is right for the BBC's ambitions to be matching them. If the answer is yes, and the Government and the BBC seem to think so, what impact will it have on the commercial sector?
	At some point, it may become a brake on investment. In other areas of capital-intensive businesses—for example, telecoms or airlines—as the commercial sector has expanded to meet the needs of consumers, and as more sophisticated on-demand services have become possible, the state-funded sector has gladly accepted the need to do less. This seems to be a fundamental question that the Government have yet to address: what do they want the BBC to do, and how far do they want the BBC to go? I shall be interested in the Minister's answer.
	This has been an interesting debate. There are other recommendations in the Select Committee report that I have not had time to mention. We have many notable and interesting contributions. I was amused by what I think must have been a joke by the noble Lord, Lord McNally, when he said that he did not have an axe to grind about Rupert Murdoch. I note from the smiles on the Benches behind him that that was his joke of the day. Equally, I was amused by the noble Lord, Lord Peston, who said that, after 50 years, he finally recognised that competition in broadcasting improved it and did not make it worse.

Lord Bassam of Brighton: My Lords, the order has been seen and cleared by the Joint Committee on Statutory Instruments and the House of Lords Merits Committee on 22 November this year. The order, subject to the approval of this House and of another place, will bring revised codes of practice into effect from 1 January next year. Under Sections 60, 60A and 66 of the Police and Criminal Evidence Act 1984 my right honourable friend the Home Secretary has a duty to issue codes of practice to regulate the police in the exercise of their powers.
	There are currently six codes, and the order proposed adding a seventh: that of a code of practice on arrest. The current versions of codes A to F came into effect on 1 August 2004. Since then, legislative change arising from the Serious Organised Crime and Police Act 2005 and the Drugs Act 2005 have affected police powers and procedures, and parts of the current codes require review. We are also introducing a new Code G on arrest.
	Before I set out the detail of the proposed changes it may be helpful if I provide some information on the public consultation process and on the future more fundamental review of the codes themselves. The consultation ran from 31 August to 7 October. A full public consultation exercise was carried out in view of the introduction of the proposed new code of practice on arrest. Forty-six respondents replied to the consultation exercise, including the Law Society, Justice, ACPO, CPS, the Independent Police Complaints Commission and a number of other organisations and individuals. Some respondents raised similar points to those made in response to the public consultation paper on police powers issued in August 2004, and subsequently enacted in the Serious Organised Crime and Police Act 2005 (SOCAP). A summary of the responses has been placed on the Home Office website indicating those measures accepted and those subject to further consideration. The Home Office website provides a register of changes to which all suggested changes are added, irrespective of their level of merit. The aim of the register is to enable stakeholders and practitioners to submit suggestions for change, and provides an open forum in which all suggestions and their progress are publicly available.
	That brings me on to the second area and that is the more fundamental review of the PACE codes themselves and the process of introducing change. The noble Baroness, Lady Anelay, rightly stated during debate on the 2004 revision of the codes that the more frequent update of the codes was welcomed, but we have to consider that regular updating brings with it the additional burden of training on the police and, of course, on other agencies.
	Work will be starting in February next year to look at how we can improve the form and content of the codes. This will include the potential incorporation of statutory guidance which can be subject to amendment administratively to take faster, more effective account of best practice and lessons learnt. This work will be carried out in consultation with stakeholders and practitioners from the police, the legal profession, the voluntary sector, charities and academics.
	The advice of the Home Affairs Select Committee will be sought on proposed changes and parliamentary approval sought where required. The aim is to reduce bureaucracy and improve the implementation process through effective training arrangements, communications and implementation timescales.
	On the proposed amendments, Code A deals with stop and search and the requirement introduced in all force areas from 1 April this year to record encounters. Code A makes it explicit that a person's religion is not a reasonable ground for suspicion and not sufficient reason to stop and search a person. This is an important clarification and has been agreed in conjunction with the Stop and Search Action Team and the independent Community Panel. Both are working on guidance to help ensure that all stop and search powers are exercised in a non-discriminatory way, proportionately and in a way that is intelligence led.
	Recording encounters has drawn much criticism in terms of bureaucracy and time taken by officers to complete the relevant paperwork. Technology, thankfully, is moving on and forces are looking at more effective ways in which to ensure the right level of accountability. In that context it is welcome to note that the Police Federation has commented favourably and that it recognises that the recording of encounters is a legitimate policing tool that assists the police in gathering intelligence, and that it is a necessary and important means of ensuring officer accountability.
	It is worth noting that a recent study on good practice from the London School of Economics showed that 75 per cent of all stops took less than five minutes to record. These are all positive moves and a change proposed to Code A continues in that direction by allowing a police officer to give a receipt for a stop when operational requirements prevent him printing out a full copy at that time. This will, of course, leave unaffected the individual's right to follow up the matter if he wishes to do so.
	Code A currently requires an officer to provide a record of an encounter when such an encounter has taken place. It also requires an officer to provide a record when the criteria for an encounter have not been met but the person requests a copy. In such instances the officer notes on the form that the criteria have not been met. We are proposing to remove the requirement to produce a record in such circumstances and minimise the ability of those who may wish to deliberately waste an officer's time by asking for a record when an encounter has not taken place in accordance with Code A.
	Code B deals with the entry and search of premises and the seizure of property. The Serious Organised Crime and Police Act introduces fundamental change to the warrant process by enabling the issue of the multiple-use warrant. Section 8 of PACE now provides for the issue of "specific premises warrants" for one or more sets of premises specified in the application; and an "all premises warrant" for any premises occupied or controlled by the person specified in the application.
	Safeguards in the Act and Code B require that: every application to the court must demonstrate that the exercise of the warrant is justified and necessary; every use of the warrant must be individually recorded by the officer in charge of the search for scrutiny on return of the warrant to the court; and second or subsequent entry to premises specified on the warrant must be authorised in writing prior to use by an inspector not involved in the investigation. In the case of an all premises warrant where entry is sought to premises not specified on the warrant, prior written authorisation must be given by an inspector not involved in the investigation directly.
	The need for prior authorisation of an inspector not involved in the investigation complements the existing safeguards requiring all warrants to be returned to the court, suitably endorsed by the officer with the details of the search and any items seized. Both are significant protections to preventing the warrants being used to carry out "fishing expeditions".
	Concern was raised during debate in another place about the lifetime of the warrant. That has been extended from one month to three months. The extended period is appropriate, but we will provide in guidance that a warrant should be returned to the court at the earliest stage possible following completion of its operational use and not retained for three months as a matter of course.
	Code C deals with police detention. The Drugs Act 2005 extends powers to test for the presence of Class A drugs where it is believed that the misuse of drugs caused or contributed to an offence. Exercise of the new provisions requires authorisation from the Secretary of State to test on arrest, on charge, and whether the testing applies to 14 to 17 year-olds. Code C reflects these changes and sets out the safeguards requiring consent and, in the case of a 14 to 17 year-old, the need for an appropriate adult to be present.
	Drug swallowers and packers present a significant health risk in the custody suite and existing powers to identify whether a person meets this criterion has been strengthened. A new power to take ultrasounds or X-rays of those suspected of swallowing drugs is introduced, and a court can take into account the withholding by a suspect of consent to a procedure. Persons who have been charged under Section 5(2) of the Misuse of Drugs Act 1971 (possession of a controlled drug) may be detained for up to 196 hours (8 days) on the authority of a magistrate where the recovery of swallowed drugs is sought. The safeguards in PACE will apply during any period of detention.
	Code C also makes explicit that an appropriate adult is not subject to legal privilege. This simply echoes guidance issued jointly by the Home Office and the National Appropriate Adult Network in 2003. However, it is clear that we need to follow this up with more detailed and practical guidance which excludes the routine request for statements from an appropriate adult by the police but which sets out the criteria in which an appropriate adult may on an exceptional basis inform the police of information which has come to their attention as a result of their role. The appropriate adult is there to serve the interests of the vulnerable suspect, but also to serve the wider interests of the community. We will be working with the national association of appropriate adults, the Law Society, Children's Charities Coalition, ACPO and others to consider how best we can ensure that the interest of the suspect, the appropriate adult and the investigation itself are best served.
	Code D deals with the identification of suspects. The proposed changes reflect the measures aimed at raising the ability of the police to identify suspects and minimising the ability of offenders to raise identity as an issue. Section 116 of the Serious Organised Crime and Police Act 2005 enables police, community support officers and accredited persons to photograph persons on the street where they have been arrested, detained or given a fixed penalty notice. That will assist officers with fine enforcements and avoid the offender disputing their presence at the scene when a fixed penalty notice was issued. It will also prevent suspects either reported for summons or issued with street bail similarly claiming that they were not the person the officer had dealt with on a particular occasion on the street.
	The code puts moving and still images on the same footing and removes an existing anomaly in the code to allow for an unusual physical feature during a video identification procedure to be concealed or physically replicated on other images. Video identifications can be carried out far quicker than physical parades. This can increase the ability of the witness to identify the suspect and minimise potential stress to him, as well as reducing delays in the investigative process. At the same time, the changes to Code D will ensure that the procedure is a robust test of the witness's recollection.
	Section 119 of SOCAP amends Section 65 of PACE to extend the definition of both intimate and non-intimate samples. The amendment allows swabs to be taken with consent from specific intimate parts of the male suspects and female victims.
	PACE, as amended by Section 118 of SOCAP, allows the police to take an impression of a person's footwear with or without consent. An impression may be taken without consent only where a person has been arrested for, charged with or informed that he or she will be reported for a recordable offence and where he or she has not previously had an impression taken during the course of the investigation. Footwear impressions do not of course confirm a person's identity but they do show that a person was wearing specific footwear at the scene of the incident. That is why Code D does not provide the same criteria for footwear as it does for fingerprints or DNA samples.
	Code D, like the other codes, focuses on the suspect. However, we have amended this code to take account of vulnerable witnesses involved in identification procedures and require that a pre-trial support person accompanies them.
	I turn to Code E, which deals with the aural recording of interviews with suspects. Technology has moved on since the introduction of this code and it has been amended to allow the use of audio recording rather than the limited requirement to tape-record. However, the same safeguards remain in place.
	Code F deals with the audio and visual recording of police interviews with suspects. No changes are proposed and the code remains as guidance which should be followed when audio and visual recordings are carried out simultaneously.
	Finally, I turn to Code G. As I said earlier, this is a new code on arrest. The Serious Organised Crime and Police Act introduced the power of arrest for any offence and placed an additional level of accountability on a police officer by requiring that he or she must show why arrest is necessary. The code makes it clear at the outset that the use of the power of arrest must be fully justified and that the officer should consider whether the necessary objectives can be met by other, less intrusive means.
	The introduction of the test of necessity means that each arrest will have to be justified and it removes the concept of using this significant interference with a person's liberty simply because statute says that you have a power of arrest. The code sets out the criteria of necessity and makes it clear that the criteria are exhaustive. The circumstances in which those criteria are applied are an operational matter for the individual officer. The officer must have that discretion in order best to meet operational needs. The same discretion currently applies in relation to the powers of arrest under Sections 24 and 25 of PACE but—and it is an important "but"—the SOCAP arrest provisions now require the officer to consider, and indeed to justify, his decision to effect an arrest. That justification will be required when the officer brings a suspect before the custody officer, and during consideration by senior officers, the prosecutor, the courts and, if applicable, the Independent Police Complaints Commission.
	Code G and the new power under PACE simplify a complex myriad of powers of arrest, as described in the Home Office/Cabinet Office review conducted in 2002. We have carefully followed the recommendation of that review to simplify and rationalise arrest powers, and Parliament has approved that change. Code G provides an important new development and, as with the existing and new provisions of all the PACE codes of practice, the contents will be subject to continuous monitoring and review.
	I apologise for the length of this statement on the codes but they are extremely important and their revisions have taken a considerable amount of time. In some parts, they cover new and significant departures. I beg to move.
	Moved, That the draft order laid before the House on 9 November be approved [9th Report from the Joint Committee and 15th Report from the Merits Committee].—(Lord Bassam of Brighton.)

Lord Bassam of Brighton: rose to move, That the draft order laid before the House on 23 November be approved [11th Report from the Joint Committee].

Lord Bassam of Brighton: My Lords, I promise that this opening will not be quite as long as that for the previous order. The order amending the Serious Organised Crime and Police Act 2005 and other legislation that was amended by that Act was seen and cleared by the Joint Committee on Statutory Instruments on 30 November. The order, subject to the approval of this House and the other place, will come into force on 1 January next year.
	The amendments cover the number of typographical and drafting errors in the original Serious Organised Crime and Police Act 2005 and other legislation which needs to be amended before the provisions come into effect. Articles 2 to 5 of the order cover drafting amendments correcting minor errors including in Section 179 of the 2005 Act which relates to the Short Title and extent of the Act, and entries in the repeals and revocations of the Proceeds of Crime Act 2002 in the 2005 Act.
	The amendments to Section 179 extend Section 56 of the 2005 Act, which provides for the application of discrimination legislation to the Serious Organised Crime Agency seconded staff to Scotland and Northern Ireland. In so far as these amendments relate to Scotland, we have already consulted Scottish Ministers in accordance with Section 173 and I can report that they are content.
	The amendments also provide clarity on drafting and correct an inaccurate reference relating to Part V of the Police Act 1997. The first change simply inserts words omitted in error from the text of the Act, so that it is accurate and clear. The second correction changes the amendment to the Police Act 1997 so that it refers to the correct subsection of that legislation. Identical amendments will be made by order by Scottish Ministers as matters relating to the operation of the CRB are devolved.
	Sections 113 and 114 of the Serious Organised Crime and Police Act 2005 will amend the search warrant provisions in the Police and Criminal Evidence Act 1984. Noble Lords should already be aware of the changes to PACE, which are due to come into effect as I have set out earlier. These relate to "specific premises" and "all premises" warrants and their associated safeguards.
	Since the Serious Organised Crime and Police Act 2005 received Royal Assent, it has come to light that the current drafting of the amendments to PACE will inadvertently render all non-PACE warrants unlawful. All warrants, regardless of their legal base, must comply with the conditions in Sections 15 and 16 of PACE. As currently drafted, Section 15 requires all warrants to comply with the conditions for specific premises and all premises warrants.
	Search warrants under other legislation, such as Section 26 of the Theft Act 1968 and Section 23 of the Misuse of Drugs Act 1971 can apply only to a single premises, and therefore it is impossible for these warrants to comply with the conditions in Section 15 of PACE. It was always the intention to retain the ability for the police to apply for warrants under other legislation. The amendments in Article 7 and 8 of this order will correct this drafting error so that the conditions for "specific premises" and "all premises" warrants apply only to this type of warrant.
	I have outlined the amendments and the changes and corrections that the amendments make in terms of typographical and drafting errors to the Serious Organised Crime and Police Act 2005, and I commend the order to the House.
	Moved, That the draft order laid before the House on 23 November be approved [11th Report from the Joint Committee].—(Lord Bassam of Brighton.)

Lord Bassam of Brighton: My Lords, the Government have a comprehensive strategy in place to seize and confiscate the proceeds of crime and to combat money laundering. Over £185 million has been recovered over the last three years from drug dealers and other criminals who make people's lives a misery. Taking away criminals' profits sends out a clear message that crime does not pay. It prevents criminals funding further activity and removes negative role models from many of our communities.
	Taking the profit out of crime by seizing and confiscating criminal assets means that it is crucial that we have comprehensive measures against money laundering in place. Money laundering is not just financial crime; it is the other side of serious acquisitive crime which damages us all—trafficking in human beings, drug trafficking and Excise fraud are but three examples. The money laundering reporting system is an important element in the United Kingdom's defences against both lower level crime and serious and organised crime.
	The reporting system and a number of other measures that are in place to combat money laundering are enshrined in the Proceeds of Crime Act 2002. The Act created a single set of money laundering offences, applicable throughout the United Kingdom, to the proceeds of all crimes. There are separate offences of failure to report money laundering.
	The legislation fulfils our international obligations and helps protect the reputation of the United Kingdom financial system. Since the Act came into force in 2003, we have kept the provisions of money laundering under review. The Home Office and the Treasury have set up various bodies and groups where the private and public sectors and the regulators can work together to produce a better regime; I refer notably to the Money Laundering Advisory Committee.
	Earlier this year, in response to issues raised in those working groups, we made some changes to the 2002 Act in the Serious Organised Crime and Police Act 2005. Those changes help to reduce the burden on the regulated sector in complying with the law on money laundering and to improve the effectiveness of the system. In particular, there are some exemptions over what has to be reported and reduced penalties over the failure to use the form in which reports must be filed. Some of the new provisions came into effect on 1 July and the rest will be introduced over the next few months.
	The order makes a further minor adjustment to the requirement to report knowledge or suspicion of money laundering to the National Criminal Intelligence Service. It is the outcome of an informal consultation exercise that the Home Office conducted last year. The consultation was on whether the law on the duty of accountants, auditors and tax advisers to report money laundering under the Proceeds of Crime Act 2002 needed to be changed to bring it fully into line with European Community law. What prompted that exercise were representations that the Home Office had received from the Institute of Chartered Accountants in England and Wales that the current legislation discriminated unfairly against accountants, auditors and tax advisers. That, it claimed, was contrary to the second EC Money Laundering Directive.
	Under the Proceeds of Crime Act, persons working in the regulated sector are criminally liable if they fail to report where they had knowledge, suspicion, or reasonable grounds for knowledge or suspicion, that another person was engaged in money laundering. The regulated sector is essentially banks, building societies and other financial institutions; it also includes the legal and accountancy professions. Section 330 of the Act makes it clear that the relevant "failure to disclose" offences are not committed if the person is a legal adviser and the information comes to him or her in privileged circumstances. Article 2 of the order amends Section 330 of the Act. The defence to the "failure to disclose" offence, which currently applies to professional legal advisers in certain circumstances, is extended to include accountants, auditors and tax advisers who satisfy certain conditions. The equal treatment between those professions that the order provides for will apply only to the very limited extent that they are carrying out effectively the same functions in relation to legal advice.
	The limited exemption from the requirement to report money laundering will apply only to accountants, auditors and tax advisers who are members of a professional body that requires a test of competence as a condition of membership and the maintenance of professional standards, including sanctions for non-compliance with those standards. The exemption will not apply to accountants or accountancy firms unaffiliated to a professional body of the type described in Article 2(5) of the order.
	There is a very important exception to the reporting exemption currently in the legislation as regards lawyers. The client's right to confidentiality does not apply where he is trying to use his relationship with the lawyer to further a criminal purpose. Where that happens, a report would need to be made to the National Criminal Intelligence Service in the usual way. That exception would also to apply to accountants under the order.
	The legal and accountancy professions have expressed concern about the position of staff in offices who are not legal advisers or other relevant professional advisers and who may become aware of privileged material giving rise to suspicion of another person's money laundering. We have addressed those issues in the order. The amendments to the 2002 Act made by the order provide a defence for a person who is employed by, or is in partnership with, a professional legal adviser or other relevant professional adviser, as defined in the order. Those are people who are part of the team giving advice or support but who are not themselves professionally qualified. That will therefore also protect, for example, a clerk or secretary in the firm as well as other specialist advisers.
	The Money Laundering Regulations 2003 (SI 2003/3075) also give effect to the second EC Money Laundering Directive. In addition to amending Section 330 of the Proceeds of Crime Act, the order makes a similar amendment to the Money Laundering Regulations 2003.
	The Government will do everything that they can to reduce the burden on businesses in the so-called regulated sector imposed by the legislation. We need to know more about the effectiveness of suspicious activity reports. The Serious Organised Crime Agency will take lead ownership of the suspicious activity reporting system. Sir Stephen Lander, the chairman-designate of the agency, is carrying out a review of the existing regime, reporting back to my right honourable friends the Home Secretary and the Chancellor of the Exchequer by March next year. The Government are fully committed to working with the financial services industry, the legal profession and the accountancy profession to maintain strong defences against money laundering. The amendment to the Proceeds of Crime Act, to which the order gives effect, will help to reduce the regulatory burden on accountants, auditors and tax advisers in certain circumstances, without damaging the effectiveness of the money laundering reporting regime. I hope that the order is approved. I beg to move.
	Moved, That the draft order laid before the House on 22 November be approved [12th Report from the Joint Committee].—(Lord Bassam of Brighton.)

Baroness Cox: rose to ask Her Majesty's Government what is their assessment of recent developments in Sudan.
	My Lords, I am deeply grateful to all noble Lords contributing to this timely debate, because the situation in Sudan remains critical and recent developments are cause for deep concern. When the National Islamic Front—NIF—regime seized power by military force, it began systematic military offensives against its own peoples in the south, the Nuba mountains, Abyei in the west and the Beja people in the east. It also denied access by UN's Operation Lifeline Sudan to areas under attack, so no one could take aid to its victims or see what it was doing. I was able to visit those no-go areas 28 times during the war and witnessed its brutal policies, which, even before Darfur, left 2 million people dead and 4 million displaced. Many more people have since perished in Darfur than in the whole tsunami.
	This is the background to the comprehensive peace agreement—CPA—signed in January. While most observers welcomed the prospect of a decline in violence, many who suffered at the hands of the NIF were sceptical. But extreme war-weariness and the involvement of the international community generated some optimism. Sadly, subsequent events. especially the death of Dr John Garang, have threatened to extinguish that optimism.
	Current concerns include the composition of the new Government of National Unity; arrangements for power sharing and control of oil revenues; and continuing humanitarian crises, conflicts and violations of human rights. Despite the formation of the GNU, there is evidence of bad faith by the NIF. It dominates the presidency, including its advisory council, and has created, in effect, a shadow government who will retain all real power. So there has been a silent coup in which the facade of shared governance masks the NIF's ruthless preservation of power.
	Most conspicuously, the NIF—the ruling faction of the National Congress Party—has retained the two key economic ministries responsible for accounting for Sudan's huge oil revenues. The southern Sudanese Peoples' Liberation Movement—SPLM—fought for at least one of these ministries, as clearly intended in the CPA, but the NIF refused. It is thus exceedingly unlikely that southern Sudan will receive its fair share of the oil wealth according to the wealth-sharing protocol, which is a cornerstone of the CPA.
	There has also been conflict over the border between north and south, with northerners moving it southward to claim control of fertile land and oil resources. The NIF has also encouraged the southward migration of Arab peoples into areas from which African tribes were ethnically cleansed. Thus, the NIF/NCP currently claims that the Heglig oilfield in Western Upper Nile lies within northern Sudan. That will severely diminish oil revenues for the south, which are desperately needed for post-war reconstruction and humanitarian crises.
	Four million southerners were displaced during the civil war. Some moved to northern towns, where many eked out unhappy existences in IDP camps. Others fled to refugee camps in neighbouring countries. However, many have begun the long trek home, and 240,000 had already returned by July. They are returning with their few belongings to devastated areas that cannot sustain this influx. There has been great disappointment. According to the deputy special representative for the UN Secretary- General in Sudan and the humanitarian co-ordinator:
	"If you look at the current basic indicators and social services in the SPLM areas, it is very difficult there. You have a huge educational problem and everything else: no health, water, roads, no functioning markets, no justice systems at all, no police, no shops or supply of commodities. The nature of the problem is enormous and what needs to be done is a massive construction of everything".
	The World Bank and other development partners have pledged $900 million for southern Sudan. It is vital that this assistance is provided as a matter of urgency. Meanwhile, reports are coming in of more humanitarian crises, or incipient crises, in the Nuba mountains and in the Beja people's lands in the east.
	However, forces are at work in many areas that actively obstruct the processes of redevelopment. For example, the Lord's Resistance Army, supported by the NIF, continues to terrorise the people of northern Uganda and southern Sudan. On 2 November, the Swiss Foundation for Mine Action suspended operations in areas of southern Sudan after the LRA killed two of its de-miners. A week earlier, two aid workers were killed in LRA attacks in northern Uganda, prompting several NGOs to suspend work in that region.
	I shall briefly summarise the catastrophe in Darfur: NIF troops and allied militia continue to attack civilian targets and aid workers and to hinder humanitarian efforts, despite the presence of African Union troops and monitors. It is estimated that close to 400,000 people may have died since violence broke out in 2003. Some analysts estimate that 15,000 Darfuris are dying daily and that over 2 million Darfuris have been displaced to Chad or to camps for internally displaced people, which now litter the landscape. Meanwhile the Janjaweed continue to rape and pillage, despite the government's obligation under UN Security Council Resolution 1556 to disarm the Janjaweed militias and rein in their activities. There is now evidence of the Janjaweed enslaving villagers, forcing them to work and to endure gang rape. Aid workers have also become targets. On 1 September, an aid convoy was ambushed and the aid workers were beaten, stripped and whipped, and on 8 October two contractors were killed.
	This politically motivated violence is condemning the African population in Darfur to starvation. The situation there can indeed be described as genocide by attrition. The 6,000-plus African Union force deployed to provide security in Darfur was never large enough to police an area the size of France. Despite repeated requests for more money and logistical support from the West, it still lacks adequate finance, military hardware and fuel, and, despite the lack of those essential resources, the UNHCR has announced a cut in aid to displaced people in Darfur.
	Sudan is scheduled to assume the presidency of the AU in January 2006. Given the continuing horrors in Darfur and the fact that the government are an active party to the conflict there, that presidency is surely inconceivable. Another cause for concern is the retention by the NIF of the Interior Ministry, so that human rights issues, including freedom of the press and of political expression and freedom from arbitrary arrest and torture, will be controlled by the NIF, with its notorious disregard for human rights. Recent causes for concern include a crackdown on the press in Khartoum; numerous reports of arrests and torture; and, on 18 October, a Lutheran church in Khartoum was torched in broad daylight.
	The NIF has also taken a series of unilateral actions affecting humanitarian relief. Those include new visa regulations delaying access of key personnel and restrictions on financing aid organisations. Those new regulations could not have come at a worse time. Food insecurity is mounting, malnutrition levels are rising and humanitarian assistance is critically short. The mortality rate in under-fives in some areas, especially the Upper Nile region, is critical, comparable to Niger. Despite the billions of dollars in annual oil revenues, the NIF has the temerity to blame the international community for the suffering of its people.
	Following that catalogue of concerns, will the Government seek assurances from the Government of Sudan that they will ensure the rights of the south to oil revenues and the boundaries agreed under the Machakos agreement; that they will fulfil their undertakings under Security Council Resolution 1556 to rein in the Janjaweed; that they cease all assistance to the LRA; and that they ratify the Convention against Torture as soon as possible? Will the Government use every appropriate initiative to ensure that the African Union presence in Sudan receives increased funding, manpower and mandate to allow it more effectively to protect civilians and aid workers? Finally, will the Government urge members of the African Union to delay the Sudanese presidency until a clear resolution of the Darfur issue has been attained?
	Sudan cannot function as a country, and the new Government of National Unity cannot serve as a means of democratising power, as long as the NIF is engaged in genocide in Darfur and is deliberately aborting essential features of the CPA. Either the international community chooses to address those fundamental problems or it will be abandoning Sudan yet again. The people of Sudan look with justification to the United Kingdom for support at this critical time, and they will be looking to the response to this debate to see whether they can take comfort from the Government's position. I passionately hope that they will not be disappointed.

The Lord Bishop of Manchester: My Lords, I congratulate the noble Baroness on securing this debate and, once again, demonstrating by her excellent and informative speech her tireless concern on behalf of the bruised, the broken and the dying in tragic parts of the world. In the early 1980s, my wife and I had a Sudanese archdeacon staying with us at home and I remember how horrified we were as we listened to his description of his brother being attached by ropes to a vehicle and then dragged along until he was dead. It is a tragedy that, 25 years later and for so much of the time in between, Sudan is and has been one of the most terrible scenes of cruelty, homelessness, hunger, rape, torture, fighting and killing.
	Much attention has rightly been given lately by the media to the Darfur situation, but as the noble Baroness, Lady Cox, said, the situation in the south—where, incidentally, our archdeacon came from—is, in a different way, just as desperate. As the noble Baroness said, in the east there is also a war waiting to happen with the oppression of the Béja people. In fact, the humanitarian issues in the east are being rather neglected by the international media.
	Since the peace deal was signed in 2005, the situation in the south of Sudan has fluctuated. It was only pressure from the international community that caused that peace deal to be signed in the first place after 22 years of war. The truth is that only international pressure will enable a true peace to be established and maintained.
	The Comprehensive Peace Agreement allows for a six-year interim period during which resources are supposedly shared and a foundation put in place for a future of unity in the country. I am afraid that in many ways the Darfur situation is slowing up the CPA process. In any case, the 4 million displaced by the war between north and south are simply watching and waiting, with some sending representatives back to their home areas to see what is happening, and many returning to their displaced families having found that nothing has happened. In most areas there is still nothing in place to receive people returning from exile: no reasonable roads, no working infrastructure, no clean water, no schools, no medical facilities and no communications. Equally, in many areas there is not enough food to feed the returning people. It has been reported that a group of around 10,000 tried to return to the Bahr El Gazal region from Darfur, but the situation in Bahr El Gazal was so bad that they realised it would be better to be back in Darfur.
	Most people feel rather like the pawns in a chess game, being utterly helpless to do anything. Large-scale returns estimated at 580,000 are expected over the next dry season. However, many communities in the south lack the sustained livelihoods, necessary resources and opportunities to be able to make decent lives. The vice-president of the government of southern Sudan has recently spoken about a "tsunami of returns". To date, planning and preparation has focused on en-route support rather than addressing the main elements of viable return and reintegration, ensuring that there is an environment at the community level that is conducive to return to.
	As the noble Baroness said, John Garang's death was a huge loss to the south; the people had come to rely on him as a kind of victor, brother and almost saviour. The handing over to his successor seemed to go well and he appeared to be more democratic, but my own estimate is that he is an inexperienced politician and possibly unlikely to be able to keep control over these complex issues. I have to say that the Church is really the only infrastructure that is widely established at the grassroots level, and it does have a huge influence. But it is itself struggling to develop strong leadership.
	As I see it, three main challenges face Sudan. The first, which has already been mentioned, is the Lord's Resistance Army, which has been moving across Equatoria from northern Uganda and its already established bases in eastern Equatoria of southern Sudan. That took many people in the south by surprise. The LRA is disrupting communities by looting, burning and abducting people. Also the trade and supply routes to the southern capital, Juba, from other parts of the south as well as from Kenya and Uganda, which were beginning to open up since the signing of the peace agreement, are now being cut off by the LRA. Much of the trade to the previous single route of the airway from Khartoum is now limited. We have also seen the news of the British Christian Aid worker who a few weeks ago was horrifically killed by the LRA in front of his wife.
	A big worry that follows from all this is that the NGOs are now in danger of pulling out of areas where the LRA has been particularly active, thus taking away not only much-needed help, but also that quality which is perhaps even more important—priceless hope, which is instilled when there is an international presence.
	Another issue is the escalating conflict between the Dinka people and other people groups. This is a long-standing conflict. Many of the Dinka were displaced because of the war and the actions of the northern government in violently clearing people from areas around the prospective oilfields in central Sudan. They fled with their cattle and settled in areas around the towns and villages of the agricultural people. The cattle randomly ate the crops and there have been intermittent tensions and clashes. But the truth is that the Dinka people now do not want to go back to their home areas. So a very strong, wise and united leadership is needed to deal with these situations. Unfortunately, there is already talk of an imbalance because of the large number of new government posts being given to Dinkas. Those who have a larger overview of the situation and the various attacks that are taking place are despairing. They feel that the world will look at southern Sudan and say what the north has been claiming all along: "There you are. They cannot rule themselves. They just end up fighting".
	The third issue is the continuing cold war between the north and south. There is a widespread belief that the north is trying to sabotage plans to develop the south and a long-standing view in the Sudan that the Arabs want the land but not the people of black Africa. There are reports coming back after landmine clearing exercises of the landmines suddenly being replaced. The noble Baroness, Lady Cox, has already mentioned the northern government's wish to move the boundaries so that the north includes more of the oilfields still being discovered. It all adds up to a total loss of trust.
	There is a serious stumbling block within the Khartoum Government which questions their commitment to national unity. A symbol of that is how they address the practical grievances of the Churches, especially in relation to the seizure of Church property, schools, guest houses and other buildings. As to the land rights in Khartoum, how can they offer to the rest of the country what they will not do in their own capital city? As we all know, the ongoing crisis in Darfur is getting worse with inadequate numbers of African Union forces for the huge task in hand. Because it is a farmer/nomad and Muslim/Muslim conflict, the Churches, though active, are not as influential as we would like them to be.
	The longer term priority is for effective education, particularly at secondary level, for which huge investment is needed. In the mean time, in addition to keeping the Churches involved and helping with medical aid, our most important task is to keep Sudan high on the public, political and media agenda, both at home and abroad, so that perpetrators of racial, tribal and religious attacks and crimes, whether at national or local level, will be deterred from committing such crimes because they will become known.
	I hope that we will hear from Minister today of the Government's continuing commitment to the Sudan and that they will do all in their power to maintain effective peacekeeping.

Lord Avebury: My Lords, the noble Baroness, Lady Cox, whose views always command enormous respect for the length and breadth of her experience in Sudan, has expressed grave concerns about the implementation of the north-south Comprehensive Peace Agreement. The right reverend Prelate spoke about the lack of trust which exists. The noble Lord, Lord St John, spoke with deep pessimism about the prospects of the agreement being fully implemented. But there are some good signs: the adoption of the interim national constitution; the installation of the Government in the south; and the partial deployment of UN peacekeepers. The process survived the tragic death of John Garang, and I hope that there is enough momentum to carry it forward. Khartoum has reduced its military presence in the south by some 17 per cent. As we have heard, SPLA troops have entered the city of Juba peacefully. Some 4,000 UNMIS troops and observers are in the mission area, compared with the target of 10,000 that was set by UNSCR 1590 last March. We understand that there have been some logistical difficulties. It would be useful if the Minister could say whether a timetable exists for the deployment to be completed.
	We would be grateful too for a first reaction to the request from Jan Pronk of SRSG to the international community for $1.7 billion for Sudan, which is a third of the total of the UN's humanitarian appeal for next year. Donors would be keener to produce this enormous sum if it were not for the continuing violence in Darfur, as well as the grievances of the Beja people in the east, about which the noble Baroness spoke, as she has many times in the past. The talks between Khartoum and the Eastern Front, which were supposed to begin in November, were postponed for a month. I understand that they have now been put off again until January.
	Has the UK made any offer to contribute to the $1.7 billion? Is it conditional on progress at the Abuja talks, which seem to have run into trouble, with both rebel groups rejecting the AU formula for power sharing? Will the Minister give us an update on the negotiations and his assessment on whether there is any realistic hope of concluding an agreement by the end of the year as was being suggested until a few days ago?
	I know that the south is beginning from ground zero, but part of the money for de-mining and infrastructure developments should come out of the south's 50 per cent share of the oil revenues, plus the additional 2 per cent for the states where the oil is produced. What arrangements are being made to ensure that the revenue from the oil output, which is estimated to reach 750,000 barrels a day by the end of 2006, are properly recorded and audited? Sudan is not a member of the EITI and should be asked to sign up to that agreement. Taxpayers in donor countries will not be keen on writing large cheques to a country that is not fully transparent.
	We should also help the south to resuscitate its agriculture and its trade with neighbouring Ethiopia, Uganda, Kenya and DRC so as to reduce the need for foreign aid.
	The situation in Darfur has been described as the greatest humanitarian disaster in the world, with further attacks continuing, as we have heard, by the Janjaweed and the Sudanese military on the civilian population in spite of the repeated warnings that have been given by the international community. On Tuesday, militias attacked a town in west Darfur and destroyed wells constructed for the local people by humanitarian agencies. This seems to be part of a more general campaign to destroy farmland, crops and water supplies.
	It has been reported separately that there has been a huge increase in the number of attacks and robberies on humanitarian workers. An attack took place on three villages about 40 kilometres north of Nyala by Sudanese armed forces and militia last Saturday, displacing 7,000 people and causing an unknown number of casualties. People of 20 villages in southern Darfur have sought refuge in Gereida, where the internally displaced have increased to 60,000 in the past few weeks.
	This brings me to the question of whether the size and mandate of the AU force is adequate for the task it is undertaking, or should be asked to undertake. A month ago, the force had reached 5,500 military and civilian personnel plus 1,000 police, which is not far short of the authorised number of 7,700, although it took them a long time to get there. The Minister said in a recent answer that there would be an assessment in the near future of AMIS's effectiveness, and of whether any further expansion was required. The international military advice in March was that the mandate was adequate, but that more troops were needed to deliver it effectively.
	Clearly, the international responsibility to protect the civilian population against overwhelming humanitarian disaster, which was first invoked in the case of Kosovo but is now perhaps a customary principle of international law, has not been observed in Darfur. AMIS has not been asked to prevent the attacks on civilians and the few assets that allow them to stay alive in a harsh environment. It has been obstructed by Khartoum's failure to co-operate, exemplified by the refusal to allow unrestricted use of Sudan's airspace and the obstacles that were placed in the way of the delivery of essential equipment, such as the Canadian armoured vehicles that, I am glad to see, have now at last been allowed through.
	Nor have the Government of Sudan co-operated in the arrest and prosecution of those who commit war crimes and crimes against humanity. Since not a single one of the militia criminals who have perpetrated innumerable war crimes has been arrested, an expanded AMIS should be given the task, and should be reinforced with teams of experts who could take witness statements and collect forensic evidence, using methods that comply with the rules of evidence of the International Criminal Court.
	The Prosecutor of the ICC has opened an investigation into a number of cases that were referred to him by the Security Council, based on the report of the International Commissioner of Inquiry on Darfur established by the Secretary-General. He says that his investigation, which has only just begun, needs the sustained co-operation of national and international authorities, including the African Union, as required by the Security Council. Clearly he will get nothing from Khartoum. If witnesses are to be persuaded to make statements, they will need protection. Although there was a great deal of self-congratulation about the precedent of getting a reference to the ICC through the Security Council, war criminals have nothing to fear unless there is a determined and systematic campaign to collect and store the evidence.
	After Srebrenica and Rwanda there was a lot of hand-wringing. There were inquiries into the failure of the international community to respond in time, or with effective force, to the threat of genocide and mass murder. The cardinal lesson of Srebrenica, according to the Secretary-General, was:
	"that a deliberate and systematic attempt to terrorise, expel or murder an entire people must be met decisively with all necessary means, and with the political will to carry the policy through to its logical conclusion".
	In his comment on the official report on Rwanda, he said:
	"All of us must bitterly regret that we did not do more to prevent it. There was a United Nations force in the country at the time, but it was neither mandated nor equipped for the kind of forceful action that would have been needed to prevent or halt the genocide. On behalf of the United Nations, I acknowledge this failure and express my deep remorse".
	Yesterday, Mr Annan said he was gravely concerned about the worsening situation in Darfur and urged the Security Council and the donor community to do everything possible to assist AMIS. But that has all been said before. The very least we should and can do now is to call an emergency meeting of the Security Council and invite the AU and its commander in Darfur to attend, bringing proposals for protecting civilians from further attack, disarming the Janjaweed and bringing to justice those who are still perpetrating war crimes and crimes against humanity.